Refer to the Above Diagram for a Private Closed Economy

question 40

Multiple Choice

Refer to the above diagram for a private closed economy.At the $400 level of GDP:

• A)aggregate expenditures exceed GDP with the result that GDP will rise.
• B)consumption is $350 and planned investment is zero so that aggregate expenditures are $350.
• C)consumption is $300 and planned investment is $50 so that aggregate expenditures are $350.
• D)consumption is $300 and actual investment is $100 so that aggregate expenditures are $400.

---

Definitions:

Equilibrium Price

A price where the supplied goods quantity is identical to the demanded goods quantity.

Law Of Demand

An increase in a product’s price will reduce the quantity of it demanded, and conversely for a decrease in price.

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price over a specified period.

Excess Supply

The situation in which the quantity of a good or service offered by producers exceeds the quantity demanded by consumers at a given price, often leading to a decrease in prices.