PRICE LEVEL (CPI) 130 AS AD 2 125 120 115 110 AD1 105 100 95 90 90 8.0 8.5 9.0 9.5 10.0 10.5 11.0 11.5 12.0 REAL GDP (Trillions of dollars) Macro Eq 2 Suppose the level of real GDP supplied by firms is $9 trillion and the price level is 100. In this case, the quantity of real GDP supplied is the real GDP demanded at a price level of 100, and firms will experience an unplanned in inventories. Firms will respond to the change in inventories by producing output until the economy reaches macroeconomic equilibrium at a price level of and real GDP of Suppose consumers and businesses become more optimistic about future economic conditions, causing the aggregate demand curve to increase by $1.5 trillion at each price level. Use the green line (triangle symbols) to show the new aggregate demand curve (AD2). Be sure that AD2 is parallel to AD1 (you can click on AD 1 to see its slope). Then use the purple drop lines (diamond symbol) to indicate the new macroeconomic equilibrium after the shift of aggregate demand. The increase in aggregate demand leads to a movement along the range of the aggregate supply curve, causing the equilibrium price level to and the equilibrium level of real GDP to The following graph shows the aggregate demand (AD₁) and aggregate supply (AS) curves for a hypothetical economy with full-employment output of $11 trillion. PRICE LEVEL (CPI) 130 AS 125 120 115 110 AD1 105 100 95 90 90 8.0 8.5 9.0 9.5 10.0 10.5 11.0 11.5 12.0 REAL GDP (Trillions of dollars) AD2 Macro Eq 2 ? Suppose the level of real GDP supplied by firms is $9 trillion and the price level is 100. In this case, the quantity of real GDP supplied is the real GDP demanded at a price level of 100, and firms will experience an unplanned in inventories. Firms will respond to the change in inventories by producing output until the economy reaches macroeconomic equilibrium at a price level of and real GDP of Suppose consumers and businesses become more optimistic about future economic conditions, causing the aggregate demand curve to increase by $1.5 trillion at each price level. Use the green line (triangle symbols) to show the new aggregate demand curve (AD 2). Be sure that AD2 is parallel to AD1 (you can click on AD1 to see its slope). Then use the purple drop lines (diamond symbol) to indicate the new macroeconomic equilibrium after the shift of aggregate demand.