Exhibit 5.2

-Refer to Exhibit 5.2, which shows the aggregate demand and supply curves for the United States. Between period 1 and period 2, nominal GDP changed from $40,000 to:
A) $18,000 in period 1 and went back to $40,000 in period 2.
B) $18,000 in period 1 and stayed there in period 2.
C) $18,000 in period 1 and to $10,000 in period 2.
D) $10,000 in period 1 and stayed there in period 2.
E) $10,000 in period 1 and to $18,000 in period 2.

Question

Exhibit 5.2
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-Refer to Exhibit 5.2, which shows the aggregate demand and supply curves for the United States. Between period 1 and period 2, nominal GDP changed from $40,000 to:
A) $18,000 in period 1 and went back to $40,000 in period 2. 
B) $18,000 in period 1 and stayed there in period 2. 
C) $18,000 in period 1 and to $10,000 in period 2. 
D) $10,000 in period 1 and stayed there in period 2. 
E) $10,000 in period 1 and to $18,000 in period 2.

Quizplus · Accepted Answer

From period 1 to period 2, the aggregate demand curve shifted to the left. This means that there was a decrease in both price level and real GDP. Since nominal GDP is calculated using price level and real GDP, the decrease in both variables would result in a decrease in nominal GDP. The only option that shows a decrease in nominal GDP from $40,000 to $18,000 is option C, where nominal GDP decreased to $10,000 in period 2.

Exhibit 5.2 ​

Exhibit 5.2