Refer to the table below that shows the data of a country. The table given above is for a particular country in which C is consumption expenditures, I_g is gross investment expenditures, G is government expenditures, X is exports, and M is imports.All the figures are in billions of dollars.If the country's aggregate supply curve is a vertical line at the $25 billion level of real GDP, the price level will be: A)128. B)125. C)122. D)119.

Question

Quizplus · Accepted Answer

To find the equilibrium price level, we need to use the equation Y = C + I + G + (X-M). In this case, we know that Y (real GDP) is $25 billion (since the aggregate supply curve is a vertical line at this level), C is $12 billion, I is $6 billion, G is $5 billion (given in the table), and (X-M) is $2 billion (since net exports are negative, indicating that the country imports more than it exports). Therefore, we can plug in these values and solve for the price level as follows:
$25 billion = $12 billion + $6 billion + $5 billion + $2 billion - (Price Level * $25 billion)
Simplifying the equation, we get:
$25 billion = $25 billion - (Price Level * $25 billion)
Multiplying both sides by -1, we get:
-$25 billion = -Price Level * $25 billion
Dividing both sides by -$25 billion, we get:
Price Level = 125
Therefore, the answer is B (125).

Refer to the Table Below That Shows the Data of a Country