Exhibit 10.7

-Refer to Exhibit 10.7, which shows the equilibrium price level and real GDP in an aggregate demand-aggregate supply model. If prices are as expected at 160, then point W is _____

Question

Exhibit 10.7
 
-Refer to Exhibit 10.7, which shows the equilibrium price level and real GDP in an aggregate demand-aggregate supply model. If prices are as expected at 160, then point W is _____

Quizplus · Accepted Answer

Point W, where the aggregate demand curve intersects the short-run aggregate supply curve at the expected price level, represents both a short-run and a long-run equilibrium. This is because the economy is at a point where the actual price level equals the expected price level, and there is no immediate pressure for the price level or output to change.

Exhibit 10.7 -Refer to Exhibit 10.7, Which Shows the Equilibrium Price Level