If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP, then: A)unplanned investment must be occurring. B)net exports must be $300 billion. C)S + C must equal $300 billion. D)I_g + X_n must equal $300 billion.

Question

Quizplus · Accepted Answer

The equilibrium level of GDP is the sum of consumption (C), investment (I), government spending (G), and net exports (Xn). In a private open economy with no government spending, GDP = C + I + Xn. Given GDP is $1000 billion and C is $700 billion, the remaining $300 billion must be the sum of investment (I) and net exports (Xn).

If the Equilibrium Level of GDP in a Private Open