$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Real Domestic Output } \
\text { Demanded (in Billions) }
\end{array} & \text { Price Level (Index Value) } & \begin{array} { c }
\text { Real Domestic Output } \
\text { Supplied (in Billions) }
\end{array} \
\hline \$ 3,000 & 350 & \$ 9,000 \
\hline 4,000 & 300 & 8,000 \
\hline 5,000 & 250 & 7,000 \
\hline 6,000 & 200 & 6,000 \
\hline 7,000 & 150 & 5,000 \
\hline 8,000 & 100 & 4,000 \
\hline
\end{array}$$ The accompanying table shows the aggregate demand and aggregate supply schedules for a hypothetical economy. At the price level of 150, there will be a general
A) surplus in the economy, and output supplied will decrease as the price level falls.
B) shortage in the economy, and output demanded will decrease as the price level rises.
C) surplus in the economy, and output supplied will increase as the price level rises.
D) shortage in the economy, and output demanded will increase as the price level falls.

Question

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Real Domestic Output } \
\text { Demanded (in Billions) }
\end{array} & \text { Price Level (Index Value) } & \begin{array} { c } 
\text { Real Domestic Output } \
\text { Supplied (in Billions) }
\end{array} \
\hline \$ 3,000 & 350 & \$ 9,000 \
\hline 4,000 & 300 & 8,000 \
\hline 5,000 & 250 & 7,000 \
\hline 6,000 & 200 & 6,000 \
\hline 7,000 & 150 & 5,000 \
\hline 8,000 & 100 & 4,000 \
\hline
\end{array}$$ The accompanying table shows the aggregate demand and aggregate supply schedules for a hypothetical economy. At the price level of 150, there will be a general
A) surplus in the economy, and output supplied will decrease as the price level falls.
B) shortage in the economy, and output demanded will decrease as the price level rises.
C) surplus in the economy, and output supplied will increase as the price level rises.
D) shortage in the economy, and output demanded will increase as the price level falls.

Quizplus · Accepted Answer

At a price level of 150, the quantity demanded is 7,000 and the quantity supplied is 5,000, resulting in a shortage of 2,000. This suggests that there is upward pressure on prices as buyers compete for the limited quantity of output available. As the price level rises, the quantity demanded will decrease as buyers are priced out of the market, while the quantity supplied will increase as firms increase production to take advantage of the higher prices.

The Accompanying Table Shows the Aggregate Demand and Aggregate Supply