If equilibrium output in an open economy is $1000 billion,and consumption is $700 billion at that level of real output,then:

Question

Quizplus · Accepted Answer

Equilibrium output (Y) in an open economy can be expressed as Y = C + I + G + (X-M). In this case, Y = $1000 billion and C = $700 billion. Therefore, Y - C = I + G + (X-M), which simplifies to $300 billion = I + G + (X-M). Thus, the correct choice is (D), G + I + (X-M) must equal $300 billion.

If Equilibrium Output in an Open Economy Is $1000 Billion,and