If real GDP in a closed economy is $50 billion, consumption is $30 billion, and government purchases are $15 billion, what is investment?

Question

Quizplus · Accepted Answer

In a closed economy, the equation for GDP is: GDP = Consumption + Investment + Government Spending. Given that GDP is $50 billion, consumption is $30 billion, and government spending is $15 billion, investment can be calculated as: $50 billion - $30 billion - $15 billion = $5 billion. However, since there's a mistake in the calculation in the explanation (it should be $5 billion based on the calculation, but that option is not available), the correct approach to find the investment given the options would be to reassess the calculation or the options provided. Since there seems to be a misunderstanding in the explanation provided, and none of the options correctly match the calculation, the correct approach is to understand that investment in this context is meant to balance the equation, and without the correct option, we refer back to the options given for the closest or correct match based on the standard formula: GDP = C + I + G.

If Real GDP in a Closed Economy Is $50 Billion