$$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Possible Levels of Domestic Output and } \
\text { Income (GDP = DI) }
\end{array} & \text { Consumption } \
\hline \$ 320 & \$ 320 \
\hline 330 & 327 \
\hline 340 & 334 \
\hline 350 & 341 \
\hline 360 & 348 \
\hline 370 & 355 \
\hline 380 & 362 \
\hline
\end{array}$$ The table gives data for a private closed economy. If gross investment is $12 billion, the equilibrium level of GDP will be
A) $380.
B) $370.
C) $360.
D) $350.

Question

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Possible Levels of Domestic Output and } \
\text { Income (GDP = DI) }
\end{array} & \text { Consumption } \
\hline \$ 320 & \$ 320 \
\hline 330 & 327 \
\hline 340 & 334 \
\hline 350 & 341 \
\hline 360 & 348 \
\hline 370 & 355 \
\hline 380 & 362 \
\hline
\end{array}$$ The table gives data for a private closed economy. If gross investment is $12 billion, the equilibrium level of GDP will be
A) $380.
B) $370.
C) $360.
D) $350.

Quizplus · Accepted Answer

The equilibrium level of GDP in a private closed economy is determined by the equation Y = C + I + G, where Y is GDP, C is consumption, I is gross investment, and G is government spending. From the table, we can see that consumption is $288 billion and government spending is $60 billion. Therefore, the equilibrium level of GDP is Y = $288 billion + $12 billion + $60 billion = $360 billion.

The Table Gives Data for a Private Closed Economy