Suppose output is $35 billion,government purchases are $10 billion,desired consumption is $15 billion,and net exports are $4 billion.Then desired investment equals
A)$2 billion.
B)$4 billion.
C)$6 billion.
D)$8 billion.

Question

Quizplus · Accepted Answer

The equation for GDP is: Y = C + I + G + NX, 
where Y is output (or GDP), 
C is consumption, 
I is investment, 
G is government purchases, and 
NX is net exports.

Thus, we have: 
$35 billion = $15 billion + I + $10 billion + $4 billion

Simplifying the equation, we get: 
$6 billion = I

Therefore, the desired investment is $6 billion. Therefore, the correct answer is C) $6 billion.

Suppose Output Is $35 Billion,government Purchases Are $10 Billion,desired Consumption