Figure 10-18

-As shown in Figure 10-18,and assuming the aggregate demand curve shifts from AD₁ to AD₂,the full-employment level of real GDP is
A)$10 billion.
B)$4 billion.
C)$100 billion.
D)unable to be determined.

Question

Figure 10-18
 
-As shown in Figure 10-18,and assuming the aggregate demand curve shifts from AD₁ to AD₂,the full-employment level of real GDP is
A)$10 billion. 
B)$4 billion. 
C)$100 billion. 
D)unable to be determined.

Quizplus · Accepted Answer

As the aggregate demand curve shifts from AD₁ to AD₂, the equilibrium point moves from point A to point B. At point B, the full-employment level of real GDP is $10 billion, which is the intersection of the long-run aggregate supply curve with the new aggregate demand curve (AD₂) at point B. Therefore, the answer is A) $10 billion.

Figure 10-18 -As Shown in Figure 10-18,and Assuming the Aggregate Demand Curve