The equilibrium level of GDP for the above private open economy is: A)Y₄. B)Y₃. C)Y₂. D)Y₁.

Question

Quizplus · Accepted Answer

The equilibrium level of GDP is where the aggregate expenditure (AE) line intersects with the 45-degree line. In this case, the AE line is given by the sum of consumption (C), investment (I), and net exports (NX). At the given interest rate, the consumption function intersects with the 45-degree line at point E1, where GDP is YS1U1B12. At this level of GDP, the AE line intersects with the 45-degree line, indicating that the economy is in equilibrium. Therefore, the answer is YS1U1B12S1U1B0.

The Equilibrium Level of GDP for the Above Private Open