The following are aggregate demand and supply schedules for a hypothetical economy.All figures are in $ billions.
Note: Potential GDP is 3,000.
-Refer to the information above to answer this question.Assume that reduced investment spending lowers aggregate demand by 600.What would the new equilibrium price level and Real GDP be?
A)170 and 2,400.
B)130 and 2,400.
C)130 and 3,000.
D)150 and 2,600.

Question

The following are aggregate demand and supply schedules for a hypothetical economy.All figures are in $ billions.
  Note: Potential GDP is 3,000.
-Refer to the information above to answer this question.Assume that reduced investment spending lowers aggregate demand by 600.What would the new equilibrium price level and Real GDP be?
A)170 and 2,400. 
B)130 and 2,400. 
C)130 and 3,000. 
D)150 and 2,600.

Quizplus · Accepted Answer

The reduction in investment spending decreases aggregate demand, leading to a lower equilibrium Real GDP. The new equilibrium price level and Real GDP would adjust to 150 and 2,600, respectively, reflecting the decrease in aggregate demand by 600.

The Following Are Aggregate Demand and Supply Schedules for a Hypothetical