The following are an aggregate demand and supply schedules for a hypothetical economy.All figures in $ billions.

-Refer to the information above to answer this question.What are the implications if the price level is 120?
A)The price level is above equilibrium.
B)There is a shortage of real output of 300.
C)There is a surplus of real output of 300.
D)There is a surplus of real output of 150.

Question

The following are an aggregate demand and supply schedules for a hypothetical economy.All figures in $ billions.
 
-Refer to the information above to answer this question.What are the implications if the price level is 120?
A)The price level is above equilibrium. 
B)There is a shortage of real output of 300. 
C)There is a surplus of real output of 300. 
D)There is a surplus of real output of 150.

Quizplus · Accepted Answer

At a price level of 120, the quantity of real output demanded is 2300, while the quantity of real output supplied is only 2000. This indicates a shortage of real output of 300, which suggests that the price level is above equilibrium. Therefore, the best choice is B.

The Following Are an Aggregate Demand and Supply Schedules for a Hypothetical