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

If the amount of real output demanded at each price level falls by $200, the aggregate demand schedule shifts leftward by $200 at each price level. This means at each price level, there is a decrease in both the equilibrium price level and the equilibrium level of real domestic output. The new equilibrium is found at the intersection of the new aggregate demand and the original aggregate supply curves. The new equilibrium price level is $150 and the new equilibrium level of real domestic output is $300.

The Following Aggregate Demand and Supply Schedules Are for a Hypothetical