Refer to the information provided in Table 9.6 below to answer the questions that follow.
Table 9.6
All Figures in Billions of Dollars
-Refer to Table 9.6. The economy is at the equilibrium level of output. If government spending decreases by $100 billion, the new equilibrium level of output is

Question

Refer to the information provided in Table 9.6 below to answer the questions that follow.
Table 9.6
All Figures in Billions of Dollars 
-Refer to Table 9.6. The economy is at the equilibrium level of output. If government spending decreases by $100 billion, the new equilibrium level of output is

Quizplus · Accepted Answer

The decrease in government spending will shift the aggregate demand curve to the left, causing a decrease in equilibrium output. The decrease in government spending of $100 billion will shift the AD curve by the same amount. From the table, we can see that at an output level of $2,400 billion, the AD curve intersects with the SRAS curve. Therefore, the new equilibrium level of output is $2,400 billion.

Refer to the Information Provided in Table 9