Refer to the above diagram for a private closed economy.In this economy investment:
A)decreases as GDP increases.
B)increases as GDP increases.
C)is $40 billion at all levels of GDP.
D)is $60 billion at all levels of GDP.

Question

Refer to the above diagram for a private closed economy.In this economy investment:
A)decreases as GDP increases. 
B)increases as GDP increases. 
C)is $40 billion at all levels of GDP. 
D)is $60 billion at all levels of GDP.

Quizplus · Accepted Answer

In a private closed economy, investment is autonomous and not affected by changes in GDP. Therefore, investment is constant at $40 billion at all levels of GDP.

Refer to the Above Diagram for a Private Closed Economy