If the Equilibrium Level of GDP in a Private Open

question 156

Multiple Choice

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.

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Definitions:

Adverse Selection

A situation in which asymmetrical information leads to the selection of suboptimal market participants, often seen in insurance markets where those most likely to make a claim are also most likely to seek insurance.

Market Signals

Information or indicators that suggest the future direction of market prices, helping investors and businesses make decisions.

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe existing states, outcomes, or future events.

Individual Mandate

A requirement for individuals to have health insurance or pay a penalty, originally a key provision of the Affordable Care Act.