Use the figure below to answer the following questions.

Figure 27.2.3
There are no taxes in this economy.
-In Figure 27.2.3, at the equilibrium level of real GDP, induced expenditure is
A)$28 billion.
B)$150 billion.
C)$225 billion.
D)$347 billion.
E)$375 billion.

Question

Use the figure below to answer the following questions.
  
Figure 27.2.3
There are no taxes in this economy.
-In Figure 27.2.3, at the equilibrium level of real GDP, induced expenditure is
A)$28 billion. 
B)$150 billion. 
C)$225 billion. 
D)$347 billion. 
E)$375 billion.

Quizplus · Accepted Answer

At the equilibrium level of GDP, the intersection point of the 45-degree line and the total expenditure line represents where output equals total spending. In this case, the equilibrium level is where the total expenditure line crosses the 45-degree line at point E, which is around the $225 billion mark. Therefore, induced expenditure at the equilibrium level of GDP is $225 billion.

Use the Figure Below to Answer the Following Questions