$\begin{array}{|c|c|c|c|c|c|}
\hline
\begin{array}{c}
\text { Domestic Output } \
(G D P=D I)
\end{array} & \begin{array}{c}
\text { Aggregate } \
\text { Expenditures, } \
\text { Closed Economy }
\end{array} & \text { Exports } & \text { Imports } & \text { Net Exports } & \begin{array}{c}
\text { Aggregate } \
\text { Expenditures, Open } \
\text { Economy }
\end{array} \
\hline \$ 200 & \$ 230 & \$ 30 & \$ 20 & \$- &\$- \
\hline 250 & 270 & 30 & 20 & -&- \
\hline 300 & 310 & 30 & 20 & -& - \
\hline 350 & 350 & 30 & 20 & -& - \
\hline 400 & 390 & 30 & 20 & -& - \
\hline 450 & 430 & 30 & 20 & -& - \
\hline 500 & 470 & 30 & 20 & -& - \
\hline
\end{array}$ Complete the accompanying table and answer the question based on the resulting data. All ?gures are in billions of dollars. For the open economy, the equilibrium GDP and the multiplier are
A) $300 and 2.5.
B) $450 and 5.
C) $400 and 4.
D) $400 and 5.

Question

Quizplus · Accepted Answer

The equilibrium GDP is $400 billion, and the multiplier is 5. The multiplier is calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. In this case, MPC is (310-270)/(300-250) = 0.8. Therefore, the multiplier is 1/(1-0.8) = 5.

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