If real Gross Domestic Product (GDP)is at an equilibrium level in a closed economy,
A)C + I + G = real GDP.
B)saving will be less than planned investment.
C)unplanned inventory accumulation will equal planned inventory accumulation.
D)C + T - G = real GDP.

Question

Quizplus · Accepted Answer

At equilibrium, all planned expenditures (consumption, investment, and government spending) must be equal to the output produced in the economy, which is measured by real GDP. Therefore, C + I + G = real GDP. Option B is incorrect because saving and investment do not necessarily have to be equal at equilibrium. Option C is incorrect because unplanned inventory accumulation is not necessarily equal to planned inventory accumulation at equilibrium. Option D is incorrect because the equation C + T - G is a determination of disposable income, not real GDP.

If Real Gross Domestic Product (GDP)is at an Equilibrium Level