Unit 3.3 Chapter 11 Questions 4,5,6,7 Date: May 26th

4. a)The equilibrium will be $300 Billion but it doesnt have to be full employement because the output has to match the demand.
b) The amount of real GDP that has been demanded doesn't match the amoint supplied therefore the price levels will not be equilibrium.
c) The factors of aggregate demand are consumer wealth, consumer expectations, real interest rates and taxes.

5. a) Productivity = total output/total input
Productivity = 100 dollars / 37.5 units
Productivity = 2.667 dollars per unit

b) Per-unit production cost = total input cost/total output
Per-unit production cost = 2 dollars x 37.5 units / 100 dollars
Per-unit production cost = 0.75 dollars per unit

c) Per-unit production cost = total input cost/total output
Per-unit production cost = 3 dollars x 37.5 units / 100 dollars
Per-unit production cost = 1.125 dollars per unit

This increase in the cost of inputs will shift the AS curve inwards and the effect upon price level and output will be that price level will increase and output will decrease.