Difficulty: Medium Figure 13-4

question 29

Multiple Choice

Difficulty: Medium Figure 13-4
-Refer to Figure 13-4. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment. Suppose AE = C + I_P. I_P is autonomous and the consumption function is C = $1,000 billion + 0.5Y. If I_P = $2,000 billion, what is the equilibrium level of real GDP?

• A) $4,500 billion
• B) $6,000 billion
• C) $7,500 billion
• D) $9,000 billion

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Definitions:

Overbooking Decision

The practice of selling or booking more seats or rooms than are available, under the expectation that some bookings will cancel.

Supply Chain Profits

The total earnings generated across all stages of the product's journey from raw material to the end customer.

Wasted Capacity

The portion of production or storage capacity that goes unused or underutilized, often resulting in increased costs and inefficiencies.

Pricing

The process of determining the cost at which a product or service will be sold to consumers.