-Refer to the graph in the exhibit.Suppose the price level decreases.What will the new equilibrium level of real GDP be?

Question

-Refer to the graph in the exhibit.Suppose the price level decreases.What will the new equilibrium level of real GDP be?  
A) <$100 
B) <$20 
C) $0 
D) >$100

Quizplus · Accepted Answer

When the price level decreases, the quantity of goods and services demanded typically increases. This is because lower prices make goods and services more affordable, leading to an increase in consumption. In the context of an aggregate demand and aggregate supply model, a decrease in the price level would shift the aggregate demand curve to the right, resulting in a new equilibrium with a higher level of real GDP. Therefore, the new equilibrium level of real GDP would be greater than $100.

-Refer to the Graph in the Exhibit