Exhibit 10-2

-At the equilibrium level of GDP in Exhibit 10-2, leakages equal
A)$1.4 trillion
B)$1.3 trillion
C)$1.5 trillion
D)$1.0 trillion
E)$1.1 trillion

Question

Exhibit 10-2
 
-At the equilibrium level of GDP in Exhibit 10-2, leakages equal
A)$1.4 trillion 
B)$1.3 trillion 
C)$1.5 trillion 
D)$1.0 trillion 
E)$1.1 trillion

Quizplus · Accepted Answer

At the equilibrium level of GDP, leakages (savings, taxes, and imports) must equal injections (investment, government spending, and exports). Looking at Exhibit 10-2, the total of savings, taxes, and imports is $2.2 trillion (0.2 + 0.3 + 1.7). Therefore, at equilibrium, injections must also be $2.2 trillion, and since investment and government spending are given as $1.5 trillion and $0.4 trillion, respectively, exports must be $0.3 trillion. Thus, leakages are $1.3 trillion (0.2 + 0.3 + 0.8), which is the same as injections.

Exhibit 10-2 -At the Equilibrium Level of GDP in Exhibit 10-2, Leakages