Suppose that consumption is 9500, taxes are 2000, and government expenditures are 3500. If national saving is 2500 and the economy is closed, what is the GDP?
A) 13,000
B) 13,500
C) 15,500
D) 17,500

Question

Quizplus · Accepted Answer

In a closed economy, GDP (Y) is calculated as Y = C + I + G, where C is consumption, I is investment, and G is government spending. National saving (S) is equal to investment (I) in a closed economy, so I = S = 2500. Therefore, GDP = 9500 (C) + 2500 (I) + 3500 (G) = 15,500.

Suppose That Consumption Is 9500, Taxes Are 2000, and Government