Business, 03.12.2019 03:31 chrisraptorofficial

Refer to the table below.
real output demanded, billions price level real output supplied, billions
506 112 513
508 106 512
510 100 510
512 94 507
514 88 502
suppose that aggregate demand increases such that the amount of real output demanded rises by $7 billion at each price level.
a) by what percentage will the price level increase? will this inflation be demand-pull inflation or will it be cost-push inflation?
b) if potential real gdp (that is, full-employment gdp) is $510 billion, what will be the size of the positive gdp gap after the change in aggregate demand?
c) if the government wants to use fiscal policy to counter the resulting inflation without changing tax rates, would it increase government spending or decrease it?

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