$$\begin{array} { c c }
\begin{array} { c }
\text { Real GDP } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c }
\text { Aggregate expenditure } \
\text { (billions of 2005 dollars) }
\end{array} \
\hline 10 & 10.50 \
11 & 11.25 \
12 & 12.00 \
13 & 12.75 \
14 & 13.50 \
15 & 14.25
\end{array}$$
-The above table gives real GDP and the aggregate expenditure schedule.When real GDP is $15 billion, the amount of unplanned investment is
A) $0.75 billion
B) $14.25 billion
C) $29.25 billion
D) $15 billion
E) unknown

Question

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Real GDP } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Aggregate expenditure } \
\text { (billions of 2005 dollars) }
\end{array} \
\hline 10 & 10.50 \
11 & 11.25 \
12 & 12.00 \
13 & 12.75 \
14 & 13.50 \
15 & 14.25
\end{array}$$
-The above table gives real GDP and the aggregate expenditure schedule.When real GDP is $15 billion, the amount of unplanned investment is
A) $0.75 billion
B) $14.25 billion
C) $29.25 billion
D) $15 billion
E) unknown

Quizplus · Accepted Answer

Unplanned investment occurs when actual investment is not equal to planned investment, which occurs at the point where the aggregate expenditure line (AE) intersects the 45-degree line (where AE = GDP). At a real GDP of $15 billion, the aggregate expenditure is $14.25 billion (from the table). Since they do not intersect at this point, we have unplanned investment. The difference between the two is $15 billion - $14.25 billion = $0.75 billion. Therefore, the amount of unplanned investment at a real GDP of $15 billion is $0.75 billion.

-The Above Table Gives Real GDP and the Aggregate Expenditure