The following schedule contains data for a private closed economy.All figures are in billions.Use these data in answering the question. $\begin{array}{l}
\underline{\text { GDP }}& \underline{C} \
\$140&\$150\
180 & 180 \
220 & 210 \
260 & 240\
300 &270 \
\end{array}$ Refer to the data.If gross investment is $10 at all levels of GDP,the equilibrium GDP will be:
A) $300.
B) $260.
C) $220.
D) $180.

Question

Quizplus · Accepted Answer

Equilibrium GDP is where aggregate expenditure equals aggregate output. In equilibrium, AE = GDP = C + I + G. 
Using the given data, we can create the following formula: GDP = 200 + 0.8GDP + 10  
Solving for GDP: 
GDP = 210 + 0.8GDP 
0.2GDP = 210 
GDP = $1,050 
However, this is not the equilibrium GDP because gross investment is not included in aggregate expenditure. 
AE = C+G+I = 200 + 50 + 10 = 260 
Therefore, at an investment level of $10, the equilibrium GDP is $220 (where AE = GDP).

The Following Schedule Contains Data for a Private Closed Economy GDP ‾C‾$140$150180180220210260240300270\begin{array}{l}\underline{\text { GDP }}& \underline{C} \\\$140&\$150\\180 & 180 \\220 & 210 \\260 & 240\\300 &270 \\\end{array} GDP ​$140180220260300​C​$150180210240270​

The Following Schedule Contains Data for a Private Closed Economy $\begin{array}{l}\underline{\text { GDP }}& \underline{C} \\\$140&\$150\\180 & 180 \\220 & 210 \\260 & 240\\300 &270 \\\end{array}$