Question

The following table represents the Price Level, the Aggregate Demand, and the Aggregate Supply for the United States Economy. To the best of your ability draw an AD/AS graph from this table, making sure to provide all of the appropriate labels. In drawing the graph, designate where this economy would have a Surplus, Deficit, and Equilibrium.

Price Level	Aggregate Demand	Aggregate Supply
100	$800	$700
120	$790	$715
140	$780	$730
160	$770	$745
180	$760	$760
200	$750	$770
220	$740	$780

Answer 1

Equilibrium occurs when demand = supply where price would be 180 and quantity traded is 760 units. At price higher than 180, there would be surplus of goods. Consider an example of point C and D where supply at point D is 780 units while demand at point C is 740 units. So at price 220, there is surplus of goods.

Below price of 180, there is deficit of goods. At price of 140, there is demand of 780 units while supply of 730 units which means there is shortage due to demand > supply.