Answer the question below on the basis of the following information for a private closed economy: $$\begin{array}{l}
\begin{array} { c c }
\underline{\text { Gross Domestic Product }} &\underline{ \text { Consumption }} \
\$100& \$ 120 \
200 & 180 \
300 & 240 \
400 & 300 \
500 & 360
\end{array}\
\begin{array} { c c }
\underline{\text { Expected Rate of Return }} &\underline{ \text { Amount of Investment }} \
25 \% & \$ 0 \
20 & 20 \
15 & 40 \
10 & 60 \
5 & 80
\end{array}
\end{array}$$ Refer to the information.If the real interest rate is 10 percent,the equilibrium GDP will be:
A) $100.
B) $200.
C) $300.
D) $400.

Question

Answer the question below on the basis of the following information for a private closed economy: $$\begin{array}{l}
\begin{array} { c c } 
\underline{\text { Gross Domestic Product }} &\underline{ \text { Consumption }} \
\$100& \$ 120 \
200 & 180 \
300 & 240 \
400 & 300 \
500 & 360
\end{array}\
\begin{array} { c c } 
\underline{\text { Expected Rate of Return }} &\underline{ \text { Amount of Investment }} \
 25 \% & \$ 0 \
20 & 20 \
15 & 40 \
10 & 60 \
5 & 80
\end{array}
\end{array}$$ Refer to the information.If the real interest rate is 10 percent,the equilibrium GDP will be:
A) $100.
B) $200.
C) $300.
D) $400.

Quizplus · Accepted Answer

According to the information given, equilibrium GDP is determined by the intersection of the aggregate expenditure line and the 45-degree line. At a real interest rate of 10 percent, the aggregate expenditure line intersects the 45-degree line at a level of $300. Therefore, the equilibrium GDP will be $300.

Answer the Question Below on the Basis of the Following