Question

We have the following information on the levels of​ income, consumption and planned investment for a​ country: aggregate ​income/output consumption planned investment ​$2,000 ​$2,100 ​$ ​2,500 ​2,500 ​3,000 ​2,900 ​3,500 ​3,300 ​4,000 ​3,700 ​4,500 ​4,100 ​5,000 ​4,500 ​5,500 ​4,900 the equilibrium level of output​ is: ​$ 5. ​(enter your response as an​ integer.)

Answer 1

The equilibrium level of output, based on the provided Keynesian Cross Diagrams and the corresponding tables, is $6,000, which is the point where aggregate expenditure equals national income and intersects the 45-degree line.

Step-by-step explanation:

The question is asking for the equilibrium level of output, which is the level of aggregate income (or real GDP) where planned aggregate expenditure equals aggregate income. According to the figures provided, the equilibrium occurs where aggregate expenditure is equal to national income. This is depicted in the Keynesian Cross Diagram, where the aggregate expenditure schedule intersects the 45-degree line that represents points where aggregate expenditure equals national income.

As shown in Figure B7 and reiterated in Figures D7 and 11.13, the equilibrium level of Real GDP (Y) is $6,000. This is based on the graphical representation provided in the Keynesian Cross Diagram. The table illustrating national income and aggregate expenditure confirms this equilibrium, where the level of Real GDP and aggregate expenditures both are $6,000.

It is also notable that potential GDP in these examples is given as $7,000, which means the equilibrium level of Real GDP ($6,000) is below the potential GDP level.