$$\begin{array} { | c | c | c | c | c | c | c | }
\hline \text { Price Level } & C & I _ { g } & G & X & M & \text { Real GDP } \
\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 1 & \$ 5 & \
\hline 125 & 20 & 4 & 3 & 2 & 4 & \
\hline 122 & 22 & 6 & 3 & 3 & 3 & \
\hline 119 & 24 & 8 & 3 & 4 & 2 & \
\hline 116 & 26 & 10 & 3 & 5 & 1 & \
\hline
\end{array}$$ In the accompanying table for a particular country, C is consumption expenditures, $$I _ { g }$$ is gross
Investment expenditures, G is government expenditures, X is exports, and M is imports. All ?gures
Are in billions of dollars. If the amounts of GDP supplied at the price levels shown (in descending
Order) are $45, $43, $40, $37, and $31, the equilibrium level of real GDP will be
A) $37 billion.
B) $35 billion.
C) $26 billion.
D) $43 billion.

Question

$$\begin{array} { | c | c | c | c | c | c | c | } 
\hline \text { Price Level } & C & I _ { g } & G & X & M & \text { Real GDP } \
\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 1 & \$ 5 & \
\hline 125 & 20 & 4 & 3 & 2 & 4 & \
\hline 122 & 22 & 6 & 3 & 3 & 3 & \
\hline 119 & 24 & 8 & 3 & 4 & 2 & \
\hline 116 & 26 & 10 & 3 & 5 & 1 & \
\hline
\end{array}$$ In the accompanying table for a particular country, C is consumption expenditures, $$I _ { g }$$ is gross
Investment expenditures, G is government expenditures, X is exports, and M is imports. All ?gures
Are in billions of dollars. If the amounts of GDP supplied at the price levels shown (in descending
Order) are $45, $43, $40, $37, and $31, the equilibrium level of real GDP will be
A) $37 billion.
B) $35 billion.
C) $26 billion.
D) $43 billion.

Quizplus · Accepted Answer

The equilibrium level of real GDP is the point where the aggregate demand curve intersects the aggregate supply curve. In this case, the aggregate demand curve is given by the sum of consumption expenditures, gross investment expenditures, government expenditures, and net exports (exports minus imports). The aggregate supply curve is given by the amounts of GDP supplied at the price levels shown. The equilibrium level of real GDP is $37 billion, which is the point where the aggregate demand curve and the aggregate supply curve intersect.

In the Accompanying Table for a Particular Country, C Is