The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy.

-Refer to the above table.If the quantity of real domestic output demanded decreased by $500 and the quantity of real domestic output supplied increased by $500 at each price level,the new equilibrium price level and quantity of real domestic output would be:
A) 150 and $1500.
B) 150 and $2000.
C) 200 and $2000.
D) 250 and $2000.

Question

The following table shows the aggregate demand and aggregate supply schedule for a hypothetical economy.
 
-Refer to the above table.If the quantity of real domestic output demanded decreased by $500 and the quantity of real domestic output supplied increased by $500 at each price level,the new equilibrium price level and quantity of real domestic output would be:
A) 150 and $1500. 
B) 150 and $2000. 
C) 200 and $2000. 
D) 250 and $2000.

Quizplus · Accepted Answer

A decrease in quantity demanded and an increase in quantity supplied would result in a surplus of goods, causing firms to lower prices to sell their excess inventory. This would lead to a new equilibrium point with a lower price level and higher quantity of real domestic output. In this case, the new equilibrium point would be at a price level of 150 and a quantity of real domestic output of $2000.

The Following Table Shows the Aggregate Demand and Aggregate Supply