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Author Question: Assume the equilibrium price level is 140 and the equilibrium real GDP is 15 trillion. What happens ... (Read 149 times)

RODY.ELKHALIL

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on: Jun 29, 2018
Assume the equilibrium price level is 140 and the equilibrium real GDP is 15 trillion. What happens if the current price level equals 125?
 
  What will be an ideal response?

Question 2

Nominal GDP, PY, is 7.5 trillion. The quantity of money is 3 trillion. The velocity of circulation is
 
  A) 22.5.
  B) 10.5.
  C) 2.5.
  D) 3.


jomama

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The quantity of real GDP demanded is greater than the quantity of real GDP supplied. The price level rises to 140 because of the excess aggregate demand and when the price level reaches 140, macroeconomic equilibrium would be established.

Answer to Question 2

C


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RODY.ELKHALIL

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Reply #2 on: Jun 29, 2018
Thank you


jomama

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Reply #3 on: Jun 29, 2018
No problemo


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