The exhibit below shows the aggregate supply and aggregate demand of a country.
ID: 1129078 • Letter: T
Question
The exhibit below shows the aggregate supply and aggregate demand of a country. If a decrease in labor supply shifts the aggregate supply curve 2,000 units to the left at each price level, then the price level at the new equilibrium is _____.
Exhibit 23-3
Price Level
Aggregate Demand (units)
Aggregate Supply (units)
200
10,000
4,000
300
9,000
6,000
400
8,000
8,000
500
7,000
9,000
600
6,000
9,500
700
5,000
9,800
800
4,000
9,900
Price Level
Aggregate Demand (units)
Aggregate Supply (units)
200
10,000
4,000
300
9,000
6,000
400
8,000
8,000
500
7,000
9,000
600
6,000
9,500
700
5,000
9,800
800
4,000
9,900
Explanation / Answer
The decrease in labor supply shifts the aggregate supply curve 2,000 units to the left at each price level.
Following is the required table -
The above table shows that after shift in aggregate supply, the new aggregate supply equals aggregate demand corresponding to the price level of 500.
So,
The price level at the new equilibrium is 500.
Price Level Aggregate demand Aggregate supply New aggregate supply 200 10,000 4,000 2,000 300 9,000 6,000 4,000 400 8,000 8,000 6,000 500 7,000 9,000 7,000 600 6,000 9,500 7,500 700 5,000 9,800 7,800 800 4,000 9,900 7,900Related Questions
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