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Use the following information to draw aggregate demand (AD) and aggregate supply (AS) curves
on the graph below. Both curves are assumed to be straight lines.
|
Price Level |
Output Demanded |
 Output Supplied |
|
1,000 |
 0 |
$1,000 |
|
100 |
$900 |
 100 |
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(a) At what price level does equilibrium occur?
(b) What curve (AD or AS) would have shifted if a new equilibrium were to occur at
an output level of 700 and a price level of 700?
(c) What curve would have shifted if a new equilibrium were to occur at an output level
of 700 and price level of 500?
(d) What curve would have shifted if a new equilibrium were to occur at an output level
of 700 and a price level of 300?
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