The table below shows the aggregate demand and aggregate supply schedules for a hypothetical economy. Refer to the table above. At the price level of 150, there will be a general:
A) Surplus in the economy, and output supplied will decrease as the price level falls
B) Shortage in the economy, and output demanded will decrease as the price level rises
C) Surplus in the economy, and output supplied will increase as the price level rises
D) Shortage in the economy, and output demanded will increase as the price level falls

Question

The table below shows the aggregate demand and aggregate supply schedules for a hypothetical economy.  Refer to the table above. At the price level of 150, there will be a general:
A) Surplus in the economy, and output supplied will decrease as the price level falls 
B) Shortage in the economy, and output demanded will decrease as the price level rises 
C) Surplus in the economy, and output supplied will increase as the price level rises 
D) Shortage in the economy, and output demanded will increase as the price level falls

Quizplus · Accepted Answer

At a price level of 150, aggregate demand is $550 billion and aggregate supply is $500 billion, indicating a shortage of $50 billion. As a result, output demanded will decrease as the price level rises, since consumers will compete for scarce goods and services, causing their prices to increase. Conversely, output supplied will increase as the price level rises, since firms will see an opportunity to make higher profits and increase their production.

The Table Below Shows the Aggregate Demand and Aggregate Supply