Use the figure below to answer the following questions.

Figure 27.2.2
The economy depicted does not engage in international trade and has no government. Planned aggregate expenditure (AE)is equal to the sum of consumption expenditure (C)and investment (I).
-Refer to Figure 27.2.2. Investment is
A)$50 billion.
B)$25 billion.
C)$75 billion.
D)$100 billion.
E)increasing as real GDP increases.

Question

Use the figure below to answer the following questions.
  
Figure 27.2.2
The economy depicted does not engage in international trade and has no government. Planned aggregate expenditure (AE)is equal to the sum of consumption expenditure (C)and investment (I).
-Refer to Figure 27.2.2. Investment is
A)$50 billion. 
B)$25 billion. 
C)$75 billion. 
D)$100 billion. 
E)increasing as real GDP increases.

Quizplus · Accepted Answer

In the figure, the planned aggregate expenditure (AE) line intersects the 45-degree line where the real GDP is $100 billion. At this point, the consumption expenditure (C) is $75 billion. Therefore, investment (I) can be found by subtracting C from AE: I = AE - C = $100 billion - $75 billion = $25 billion.

Use the Figure Below to Answer the Following Questions