Answer the question on the basis of the following information for a private closed economy: $\begin{array}{l}
\begin{array} { c c }
\underline{\text { Gross Domestic Product } }& \underline{\text { Consumption } }\
\$100& \$ 100 \
200 & 160 \
300 & 220 \
400 & 280 \
500 & 340 \
600 & 440
\end{array}\
\begin{array} { c c c }
\underline{\text { Expected Rate of Return }} & \underline{\text { Amount of Investment }} \
15 \% & \$ 0 \
12 & 40 \
9 & 80 \
6 & 120 \
3 & 160 \
0 & 200
\end{array}
\end{array}$ Refer to the information.If the real interest rate is 9 percent,the equilibrium GDP will be:
A) $600.
B) $500.
C) $400.
D) $300.

Question

Answer the question on the basis of the following information for a private closed economy: $\begin{array}{l}
\begin{array} { c c } 
\underline{\text { Gross Domestic Product } }& \underline{\text { Consumption } }\
\$100& \$ 100 \
200 & 160 \
300 & 220 \
400 & 280 \
500 & 340 \
600 & 440
\end{array}\
\begin{array} { c c c } 
\underline{\text { Expected Rate of Return }} & \underline{\text { Amount of Investment }} \
15 \% & \$ 0 \
12 & 40 \
9 & 80 \
6 & 120 \
3 & 160 \
0 & 200
\end{array}
\end{array}$ Refer to the information.If the real interest rate is 9 percent,the equilibrium GDP will be:
A) $600.
B) $500.
C) $400.
D) $300.

Quizplus · Accepted Answer

At a 9% interest rate, the amount of investment is $80. Adding this to the consumption at each GDP level, equilibrium occurs where total spending (consumption + investment) equals GDP. At GDP $300, consumption is $220, and adding $80 investment equals $300, achieving equilibrium.

Answer the Question on the Basis of the Following Information