$\begin{array}{|c|c|c|c|c|c|}
\hline
\begin{array}{c}
\text { Domestic Output } \
(G D P=D I)
\end{array} & \begin{array}{c}
\text { Aggregate } \
\text { Expenditures, } \
\text { Closed Economy }
\end{array} & \text { Exports } & \text { Imports } & \text { Net Exports } & \begin{array}{c}
\text { Aggregate } \
\text { Expenditures, Open } \
\text { Economy }
\end{array} \
\hline \$ 200 & \$ 230 & \$ 30 & \$ 20 & \$- &\$- \
\hline 250 & 270 & 30 & 20 & -&- \
\hline 300 & 310 & 30 & 20 & -& - \
\hline 350 & 350 & 30 & 20 & -& - \
\hline 400 & 390 & 30 & 20 & -& - \
\hline 450 & 430 & 30 & 20 & -& - \
\hline 500 & 470 & 30 & 20 & -& - \
\hline
\end{array}$ Complete the accompanying table and answer the question based on the resulting data. All ?gures are in billions of dollars. If the economy was closed to international trade, the equilibrium GDP and the
Multiplier would be
A) $300 and 5.
B) $350 and 4.
C) $400 and 4.
D) $350 and 5.

Question

Quizplus · Accepted Answer

The multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. In this case, MPC = (change in consumption)/(change in income) = (30/50) = 0.6. Therefore, the multiplier is 1/(1-0.6) = 2.5. The equilibrium GDP is calculated as AE = GDP, where AE is aggregate expenditures. In this case, AE = C + I + G = 230 + 0 + 0 = 230. Therefore, the equilibrium GDP is 230 * 2.5 = $350 billion.

Complete the Accompanying Table and Answer the Question Based on \begin{array}{c}\text

Complete the Accompanying Table and Answer the Question Based on \begin{array}{c}
\text