Answer the following questions on the basis of the three sets of data for the co

Question

Answer the following questions on the basis of the three sets of data for the country of North Vaudeville: Price Level 100 100 100 100 Real GDP 205 230 255 280 Price Level 110 100 95 90 Real GDP 230 230 230 230 Price Level 110 100 95 90 Real GDP 280 255 230 205 a. Which set of data illustrates aggregate supply in the immediate short-run in North Vaudeville? The data in A Which set of data illustrates aggregate supply in the short run in North Vaudeville? The data in c Which set of data illustrates aggregate supply in the long run in North Vaudeville? The data in B

Explanation / Answer

a. Data A represnts the data of aggregate supply in the immediate short tun because the Level of real GDP is fluctuating and price level in constant. The price level can not adjust according to the level of GDP in the short run.

b. Data C represnts dats in the short run, because the price level has adjusted according to the level of real GDp.

c. Data B represnts the long run data of aggregate supply curve because price level is constant. This represents vertical AS curve in the long run.

if real output per hour increase by 30%,

at a price level of 110, output=(1+.3)*280=364

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