The equilibrium level of GDP in a private closed economy is where:
A)MPC = APC.
B)unemployment is about 3 percent of the labor force.
C)planned consumption equals saving.
D)saving equals planned investment.

Question

Quizplus · Accepted Answer

In a closed economy, there is no international trade, and the government does not intervene in the economy. Therefore, the equilibrium level of GDP is where saving equals planned investment because there is no leakage to other sectors or injection from the government. At this level, there is neither a surplus nor a shortage of goods and services, and the economy is at a steady state.

The Equilibrium Level of GDP in a Private Closed Economy