The table shows a private open economy. All figures are in billions of dollars. Refer to the above table. The equilibrium real GDP is:
A) $550
B) $600
C) $650
D) $700

Question

The table shows a private open economy. All figures are in billions of dollars.  Refer to the above table. The equilibrium real GDP is:
A) $550 
B) $600 
C) $650 
D) $700

Quizplus · Accepted Answer

Equilibrium real GDP occurs where aggregate demand (AD) equals aggregate supply (AS). In this case, AD is given by the equation: AD = C + I + G + NX. 
AD = 400 + 100 + 150 + (-100)
AD = 550
AS is given by the equation: AS = C + S + T. 
AS = 400 + 150 + 100
AS = 650
Equilibrium real GDP is where AD = AS, which is $600 billion in this case.

The Table Shows a Private Open Economy