Question

Suppose the level of real GDP supplied by firms is $10.5 trillion and the price level is 105. In this case, the quantity of real GDP supplied is the real GDP demanded at a price level of 105, and firms will experience an unplanned in inventories. Firms will respond to the change in inventories by producing output until the economy reaches macroeconomic equilibrium at a price level of and real GDP of . Suppose consumers and businesses become less optimistic about future economic conditions, causing the aggregate demand curve to decrease by $1.5 trillion at each price level. Use the green line (triangle symbols) to show the new aggregate demand curve (AD2). Be sure that AD2 is parallel to AD1 (you can click on AD1 to see its slope). Then use the purple drop lines (diamond symbol) to indicate the new macroeconomic equilibrium after the shift of aggregate demand. The decrease in aggregate demand leads to a movement along the range of the aggregate supply curve, causing the equilibrium price level to and the equilibrium level of real GDP to .

Answer 1

Answer:

The new equilibrium will have a lower level of price and the GDP will be $9 trillion

Explanation:

The law of the demand explain the movements of the aggregate demand,  the new equilibriun will have a lower level of price and the real GPD of $9 trillion. The change in the level of price depends on elasticities of the agregate demand and the agragate supply.