Use the Figure Below to Answer the Following Questions

question 32

Multiple Choice

Use the figure below to answer the following questions.

Figure 28.2.3
-Refer to Figure 28.2.3. 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 expected to shift to AD₁ but remains at AD₀, the new equilibrium real GDP is ________ and the new equilibrium price level is ________.

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

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Definitions:

Area Under

Refers to the space beneath the curve of a graph in mathematics and statistics, often used to calculate integrals.

Average Cost

The total cost of production divided by the total quantity produced, indicating the cost per unit of output.

Marginal Costs

The additional cost incurred by producing one more unit of a good or service.

Declining

A term indicating a decrease or reduction in quantity, quality, or importance over time.