Figure 17-3. 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 17-3. Assume the figure charts possible outcomes for the year 2018. In 2018, the economy is at point B on the left-hand graph, which corresponds to point B on the right-hand graph. Also, point A on the left-hand graph corresponds to A on the right-hand graph. The price level in the year 2018 is

Question

Figure 17-3. 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 17-3. Assume the figure charts possible outcomes for the year 2018. In 2018, the economy is at point B on the left-hand graph, which corresponds to point B on the right-hand graph. Also, point A on the left-hand graph corresponds to A on the right-hand graph. The price level in the year 2018 is

Quizplus · Accepted Answer

The equilibrium point in 2018 is B, where the AD2 curve intersects the SRAS curve. At this point, the output level is around $18.5 trillion, and the unemployment rate is around 4%. To find the corresponding price level, we need to look at the vertical axis on the left-hand graph, which represents the price level. We see that the intersection point is slightly above 163, which gives us the answer C.