The following aggregate demand and supply schedules are for a hypothetical economy:

-Refer to the above data.If the amount of real output demanded at each price level falls by $200,the equilibrium price level and equilibrium level of real domestic output will fall to:
A) 250 and $200,respectively.
B) 200 and $300,respectively.
C) 150 and $300,respectively.
D) 150 and $200,respectively.

Question

The following aggregate demand and supply schedules are for a hypothetical economy:
 
-Refer to the above data.If the amount of real output demanded at each price level falls by $200,the equilibrium price level and equilibrium level of real domestic output will fall to:
A) 250 and $200,respectively. 
B) 200 and $300,respectively. 
C) 150 and $300,respectively. 
D) 150 and $200,respectively.

Quizplus · Accepted Answer

The equilibrium price level is currently $200 and the equilibrium level of real domestic output is currently $350. If the amount of real output demanded at each price level falls by $200, this means that the demand curve has shifted downward by $200 at every price level. Therefore, the new equilibrium price level will be where the new aggregate demand curve intersects with the aggregate supply curve. This occurs at a price level of $150 and a real domestic output level of $300.

The Following Aggregate Demand and Supply Schedules Are for a Hypothetical