Use the Figure Below to Answer the Following Questions

question 82

Multiple Choice

Use the figure below to answer the following questions.
Figure 12.2.3
-Refer to Figure 12.2.3.Assume that the figure illustrates an economy initially in equilibrium at the intersection of the SAS₀ curve and the AD₀ curve.If the aggregate demand curve is correctly expected to shift to AD₁, new equilibrium real GDP is _______ and the new equilibrium price level is _______.

• A)$500 billion; 150
• B)$620 billion; 125
• C)$380 billion; 125
• D)$500 billion; 100
• E)$500 billion; 125

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Definitions:

Market Prices

The current price at which an asset or service can be bought or sold, determined by supply and demand in an open market.

Entrepreneurs

Individuals who start, manage, and assume the risks of a business or enterprise, often introducing innovations or exploring new market opportunities.

Costs of Production

The total expenses incurred in manufacturing a product or providing a service, including raw materials, labor, and overheads.

Competitive Conditions

The characteristics of a market where multiple sellers are trying to attract the same buyers, leading to benefits for consumers through lower prices and better quality.