The GDP in this closed economy is 3600.
We will use the expenditure approach to calculate the GDP in a closed economy.
GDP = C + I + G
Given data:
Disposable income change = 1000
Initial Disposable income = 1000
Initial Consumption = 1100
Initial Investment = 1000
Initial Government Spending = 500
Consumption (C) = Initial Consumption + (Disposable income change)
= 1100 + 1000
= 2100
GDP = C + I + G
= 2100 + 1000 + 500
= 3600