In a mixed open economy,the equilibrium GDP exists where: A) C_a + I_g + X_n intersects the 45-degree line. B) C_a + I_g = S_a + T + X. C) C_a + I_g + X_n + G = GDP. D) C_a + I_g + X_n = S_a + T.

Question

Quizplus · Accepted Answer

In a mixed open economy, the equilibrium GDP exists where the sum of C (consumption), I (investment), X (exports), and G (government spending) equals the sum of S (savings), T (taxes), and M (imports). Therefore, option C correctly presents the equilibrium GDP formula. Option A is incorrect since it does not include G (government spending) in the equation. Option B is incorrect because it equates the sum of C and I with the sum of S, T, and X, but it does not include government spending or imports. Option D is incorrect because it does not include imports in the equation.

In a Mixed Open Economy,the Equilibrium GDP Exists Where