Extension practice, beyond the syllabus. In a model with invented figures, aggregate demand is P = 140 − 0.5Y and short-run aggregate supply is P = 20 + 0.5Y, where P is the price level and Y is real output. A rise in costs then changes short-run aggregate supply to P = 30 + 0.5Y. Calculate the equilibrium real output and price level before the change and after it.

Skills drill (not an IB exam format).