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Exhibit: Aggregate Expenditures Curve
Figure 13-6
-(Exhibit: Aggregate Expenditures Curve) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I_P = Planned Investment, G = Government Purchases. Further, I_P and G are autonomous. The equilibrium level of real GDP is

Question

Use the following to answer questions .
Exhibit: Aggregate Expenditures Curve
Figure 13-6

-(Exhibit: Aggregate Expenditures Curve) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I_P = Planned Investment, G = Government Purchases. Further, I_P and G are autonomous. The equilibrium level of real GDP is

Quizplus · Accepted Answer

The equilibrium level of real GDP occurs where Aggregate Expenditures (AE) equals real GDP (Y). In this context, AE = C + I_P + G. Since I_P and G are autonomous, they do not change with Y, and the equilibrium is determined by the level where AE intersects the 45-degree line, which represents Y = AE. Based on the given options, $1,600 billion is the level where this condition is met.

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