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.If the aggregate quantity demanded falls by 150,what will be the equilibrium price level and real output respectively?
A)$120 and 900.
B)$130 and 950.
C)$140 and 950.
D)$150 and 1,050.
E)$160 and 1,050.

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.If the aggregate quantity demanded falls by 150,what will be the equilibrium price level and real output respectively?
A)$120 and 900. 
B)$130 and 950. 
C)$140 and 950. 
D)$150 and 1,050. 
E)$160 and 1,050.

Quizplus · Accepted Answer

A decrease in aggregate quantity demanded means a leftward shift of the aggregate demand curve. The new equilibrium price level and real output will be where the new aggregate demand curve intersects with the aggregate supply curve. Looking at the table, we can see that when AD decreases by 150, the new equilibrium is at a price level of 130 and a real output of 950. Therefore, the correct answer is B.

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