Question

(Macroeconomics):

[C = 50 + 0.90Y]
[I = 250]
[G = 175]
[Ex = Im = 25]

Based on the information above, equilibrium GDP is:

a) an amount that differs from all of the listed options.

b) $2,250 billion.

c) $1,250 billion.

d) $4,750 billion.

Answer 1

The equilibrium GDP for this economy is $10,000 billion.

Step-by-step explanation:

The equilibrium GDP can be found by setting aggregate expenditure (AE) equal to national income (Y). The equation for AE is AE = C + I + G + (X - M). Given the values for C, I, G, X, and M, we can substitute them into the equation and solve for Y.

Plugging in the values, we have:

Y = 50 + 0.90Y + 250 + 175 + 25 - 25

This equation simplifies to:

Y = 500 + 0.90Y

Solving for Y, we find that equilibrium GDP is $10,000 billion.