Consider the following data. Based on this data, over what range of real GDP (in millions of dollars) will businesses need to sell inventory in order to meet current demand? $$\begin{array} { | c | c | c | c | c | }
\hline \begin{array} { c }
\text { Real GDP } \
\text { (millions of } \
\text { dollars) }
\end{array} & \begin{array} { c }
\text { Consumptio } \
\mathbf { n } \
\text { (millions of } \
\text { dollars) }
\end{array} & \begin{array} { c }
\text { Investment } \
\text { (millions of } \
\text { dollars) }
\end{array} & \begin{array} { c }
\text { Government } \
\text { Expenditure } \
\text { (millions of } \
\text { dollars) }
\end{array} & \begin{array} { c }
\text { Net Exports } \
\text { (millions of } \
\text { dollars) }
\end{array} \
\hline 0 & 400 & 525 & 550 & - 75 \
\hline 600 & 800 & 525 & 550 & - 75 \
\hline 1,200 & 1,200 & 525 & 550 & - 75 \
\hline 1,800 & 1,600 & 525 & 550 & - 75 \
\hline 2,400 & 2,000 & 525 & 550 & - 75 \
\hline 3,000 & 2,400 & 525 & 550 & - 75 \
\hline 3,600 & 2,800 & 525 & 550 & - 75 \
\hline 4,200 & 3,200 & 525 & 550 & - 75 \
\hline 4,800 & 3,600 & 525 & 550 & - 75 \
\hline
\end{array}$$
A)when real GDP is less than 3,600
B)when real GDP is less than 4,200
C)when real GDP is greater than 4,800
D)when real GDP is greater than 4,200

Question

Consider the following data. Based on this data, over what range of real GDP (in millions of dollars) will businesses need to sell inventory in order to meet current demand? $$\begin{array} { | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Real GDP } \
\text { (millions of } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Consumptio } \
\mathbf { n } \
\text { (millions of } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Investment } \
\text { (millions of } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Government } \
\text { Expenditure } \
\text { (millions of } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Net Exports } \
\text { (millions of } \
\text { dollars) }
\end{array} \
\hline 0 & 400 & 525 & 550 & - 75 \
\hline 600 & 800 & 525 & 550 & - 75 \
\hline 1,200 & 1,200 & 525 & 550 & - 75 \
\hline 1,800 & 1,600 & 525 & 550 & - 75 \
\hline 2,400 & 2,000 & 525 & 550 & - 75 \
\hline 3,000 & 2,400 & 525 & 550 & - 75 \
\hline 3,600 & 2,800 & 525 & 550 & - 75 \
\hline 4,200 & 3,200 & 525 & 550 & - 75 \
\hline 4,800 & 3,600 & 525 & 550 & - 75 \
\hline
\end{array}$$
A)when real GDP is less than 3,600
B)when real GDP is less than 4,200
C)when real GDP is greater than 4,800
D)when real GDP is greater than 4,200

Quizplus · Accepted Answer

To determine the range of real GDP over which businesses need to sell inventory to meet current demand, we calculate the total demand (Consumption + Investment + Government Expenditure + Net Exports) at each level of real GDP and compare it to the real GDP itself. The point at which total demand equals real GDP is where businesses no longer need to sell additional inventory to meet demand. For the highest real GDP value given (4,800 million dollars), the total demand is calculated as 3,600 (Consumption) + 525 (Investment) + 550 (Government Expenditure) - 75 (Net Exports) = 4,600 million dollars, which is less than the real GDP of 4,800 million dollars. This indicates that businesses need to sell inventory to meet current demand when real GDP is less than 4,200 million dollars, as the total demand equals the real GDP at the next lower level provided in the data (4,200 million dollars of real GDP).

Consider the Following Data A)when Real GDP Is Less Than 3,600 B)when Real GDP

Consider the Following Data A)when Real GDP Is Less Than 3,600
B)when Real GDP