In Exhibit 14.17, the aggregate demand and supply curves reflect an economy in which a. full employment is at $1,000 billion GDP. b. excess aggregate supply is created when there is a shift from AD1...

In Exhibit 14.17, the aggregate demand and supply

curves reflect an economy in which

a. full employment is at $1,000 billion GDP.

b. excess aggregate supply is created when there is a

shift from AD1 to AD2.

c. excess aggregate demand forces prices up to

P = 120.

d. excess aggregate demand causes prices to stabilize

at P = 110.

e. a new equilibrium is found at point b.