Use the following table to determine the value of the equilibrium GDP.

Real GDP

Consumption

Planned Investment

Government Spending

Net Exports

$100,000

$ 80,000

$50,000

$60,000

$10,000

$200,000

$130,000

$50,000

$60,000

$10,000

$300,000

$180,000

$50,000

$60,000

$10,000

$400,000

$230,000

$50,000

$60,000

$10,000

Question

Use the following table to determine the value of the equilibrium GDP.

Real GDP

Consumption

Planned Investment

Government Spending

Net Exports

$100,000

$  80,000

$50,000

$60,000

$10,000

$200,000

$130,000

$50,000

$60,000

$10,000

$300,000

$180,000

$50,000

$60,000

$10,000

$400,000

$230,000

$50,000

$60,000

$10,000

BlackTom AI · Accepted Answer

To find the equilibrium GDP, we compare the given real GDP (Y) with the total of planned spending components: Consumption (C) + Planned Investment (I) + Government Spending (G) + Net Exports (NX).

Option 1: $300,000. At Y = $300,000, compute total spending: C = $180,000, I = $50,000, G = $60,000, NX = $10,000. Sum = 180,000 + 50,000 + 60,000 + 10,000 = $300,000. Since total spending equals Y, this is an equilibrium point.

Option 2: $400,000. Here, total spending is C = $230,000, I = $50,000, G = $60,000, NX = $10,000. Sum = 230,000 + 50,000 + 60,000 + 10,000 = $350,000. This is less than Y, so aggregate demand does not match output at this level, not equilibrium.

Option 3: $200,000. With Y = $200,000, total spending is C = $130,000, I = $50,000, G = $60,000, NX = $10,000. Sum = 130,000 + 50,000 + 60,000 + 10,000 = $250,000. Demand exceeds output here, so not equilibrium (unless prices adjust, but at the given data it’s not equal).

Option 4: $100,000. For Y = $100,000, C = $80,000, I = $50,000, G = $60,000, NX = $10,000. Sum = 80,000 + 50,000 + 60,000 + 10,000 = $200,000. Spending exceeds output, so not equilibrium.

In summary, only the case where Y = $300,000 yields total spending that exactly matches output, satisfying equilibrium conditions. The other GDP levels produce a mismatch between aggregate expenditure and output, indicating disequilibrium at those points.

Similar Questions

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