Exhibit 10-6
-According to the graph in Exhibit 10-6, if the price level increases, the new equilibrium level of real GDP must be
A)less than $20
B)less than $100
C)zero
D)greater than $100
E)greater than $200

Question

Exhibit 10-6 
-According to the graph in Exhibit 10-6, if the price level increases, the new equilibrium level of real GDP must be
A)less than $20 
B)less than $100 
C)zero 
D)greater than $100 
E)greater than $200

Quizplus · Accepted Answer

The equilibrium level of real GDP is determined by the intersection of the aggregate demand and aggregate supply curves. In the given graph, the intersection point is at a price level of $100 and a real GDP level of $200. If the price level increases, the aggregate demand curve will shift leftward, and the new equilibrium point would be at a lower level of real GDP. From the graph, it can be seen that any price level above $100 would result in a new equilibrium level of real GDP that is less than $200. The only option that satisfies this condition is choice B, which indicates that the new equilibrium level of real GDP would be less than $100.

Exhibit 10-6 -According to the Graph in Exhibit 10-6, If the Price