The table shows the consumption schedule for a hypothetical economy.All figures are in billions of dollars. Refer to the above table.If taxes were zero, government purchases of goods and services $10, planned investment $6, and net exports zero, equilibrium real GDP would be:
A)$620
B)$630
C)$640
D)$650

Question

The table shows the consumption schedule for a hypothetical economy.All figures are in billions of dollars.  Refer to the above table.If taxes were zero, government purchases of goods and services $10, planned investment $6, and net exports zero, equilibrium real GDP would be:
A)$620 
B)$630 
C)$640 
D)$650

Quizplus · Accepted Answer

Planned aggregate expenditure (PAE) = C + I + G + NX
PAE = 450 + 6 + 10 + 0 = 466
Equilibrium GDP occurs where PAE = GDP
GDP = PAE = 466
Therefore, equilibrium real GDP would be $630 billion.

The Table Shows the Consumption Schedule for a Hypothetical Economy