The Data in the First Two Columns Below Are for a Closed

Question

Examlex · Accepted Answer

The Answer is (a) For the closed economy, equilibrium GDP is $550 billion.
(b) Since $30 billion of every $50 billion increase in real GDP is added to aggregate expenditures, $20 billion must be added to saving.Therefore, MPS is.4 ($20/$50) and the multiplier is 2.5 (1/.4).
(c) For the open economy, equilibrium GDP is $600 billion.
(d) Equilibrium GDP would rise to $650 billion.
(e) When aggregate expenditures change by $25 billion, equilibrium GDP changes by $50 billion so the multiplier must be 2.

The Data in the First Two Columns Below Are for a Closed

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