Figure 35-3.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the left-hand diagram,Y represents output and on the right-hand diagram,U represents the unemployment rate.
-Refer to Figure 35-3.Assume the figure depicts possible outcomes for the year 2018.In 2018,the economy is at point A on the left-hand graph,which corresponds to point A on the right-hand graph.The price level in the year 2017 was
A)144.
B)150.
C)152.
D)156.

Question

Figure 35-3.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the left-hand diagram,Y represents output and on the right-hand diagram,U represents the unemployment rate.  
-Refer to Figure 35-3.Assume the figure depicts possible outcomes for the year 2018.In 2018,the economy is at point A on the left-hand graph,which corresponds to point A on the right-hand graph.The price level in the year 2017 was
A)144. 
B)150. 
C)152. 
D)156.

Quizplus · Accepted Answer

Since the point A is on the SRAS curve, we know that this is a point at which firms are willing to produce the level of output corresponding to Y. Since the AD curve intersects the SRAS curve at point A, we know that the actual level of output in the economy is also Y. Looking at the right-hand graph, we can see that the unemployment rate at point A is approximately 4%. Finally, we can use the AD curve to read off the price level: at point A, the price level is approximately 150. Therefore, the answer is B.