In which of the following situations for a mixed open economy will the level of GDP expand? A) When I_g + X + G exceeds S_a + M + T. B) When S_a + T + M exceeds I_g + G + X. C) When GDP exceeds C_a + I_g + G + X_n. D) When I_g + M + T exceeds C_a + X + S.

Question

Quizplus · Accepted Answer

In a mixed open economy, GDP will expand when the total demand for goods and services (I_g + X + G) exceeds the total supply of goods and services (S_a + M + T). This is because when demand exceeds supply, businesses will increase production to meet the demand, which in turn increases GDP. Therefore, choice A is correct as it reflects a situation where total demand exceeds total supply.

In Which of the Following Situations for a Mixed Open