-The Table Above Shows Purpleland's Economy Aggregate Demand and Supply

question 356

Essay

-The table above shows Purpleland's economy aggregate demand and supply schedules. Purpleland's potential GDP is $675 billion.
a) Plot the aggregate demand curve, the short-run aggregate supply curve, and the long-run aggregate supply curve.
b) What are the short-run equilibrium real GDP and price level in Purpleland?
c) What is the long-run equilibrium real GDP?
d) Is Purpleland's short-run macroeconomic equilibrium a full-employment equilibrium, below full-employment equilibrium, or above full-employment equilibrium? What is the recessionary gap (if any)? What is the inflationary gap (if any)?
e) Suppose aggregate demand increases by $150 billion. Plot the new aggregate demand curve. How do real GDP and the price level change in the short run?
f) Is Purpleland's new short-run macroeconomic equilibrium a full-employment equilibrium, below full-employment equilibrium, or above full-employment equilibrium? What is the recessionary gap (if any)? What is the inflationary gap (if any)?

---

Definitions:

Mnemonics

memory aids, especially those techniques that use vivid imagery and organizational strategies to enhance the recall of information.

Method of Loci

A memorization technique where one associates information with specific physical locations.

False Memory Syndrome

A condition in which a person's identity and interpersonal relationships are affected by strongly believed but false memories of traumatic experiences.

Medial Temporal Lobe

The inner region of the temporal lobe in the brain, involved in the organization and storage of memories.