Question

If government spends $80 billion at each level of GDP, and imposes a lump-sum tax of $100 then equilibrium GDP will be:_________

Answer 1

Answer: $350

Explanation: The equilibrium GDP or output of an economy is such that an economy output is level or equal to the total amount of planned spending. it is usually equal to the amount produced, or GDP. which is, equilibrium GDP = ( C + Ig ). Consumption expenditures usually rise with GDP while planned gross investment expenditures are independent of whatever level the GDP gets to.