The Table Gives the Aggregate Demand and Aggregate Supply Schedules

question 87

Multiple Choice

$$\begin{array} { c c c } \begin{array} { c } \text { Price level } \\\text { (GDP deflator) }\end{array} & \begin{array} { c } \text { Real GDP demanded } \\\text { (trillions of 2005 } \\\text { dollars) }\end{array} & \begin{array} { c } \text { Real GDP supplied } \\\text { (trillions of 2005 } \\\text { dollars) }\end{array} \\\hline 80 & 10 & 2 \\90 & 9 & 4 \\100 & 8 & 6 \\110 & 7 & 7 \\120 & 6 & 8 \\130 & 4 & 9 \\\hline\end{array}$$
The table gives the aggregate demand and aggregate supply schedules for a nation.
-If the price level is 120 then the aggregate quantity demanded is ________ than the aggregate quantity supplied and the price level ________.

• A)greater; rises
• B)greater; falls
• C)less; rises
• D)less; falls
• E)less; might fall, rise or not change depending on whether real GDP is more than, less than, or equal to potential GDP.

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Definitions:

Bilateral Contract

A contractual agreement in which both parties exchange mutual promises to perform certain things.

Proportional Recovery

The concept of obtaining a share of recovery or compensation that is directly proportional to one's loss or investment.

Common Law

A legal system based on court precedents and customs, as opposed to statutory laws.

Preliminary Negotiations

Initial discussions aimed at reaching an agreement or understanding before formal negotiations commence.