Question

Real GDP (billions of 2009 dollars)	C (billions of 2009 dollars)	I (billions of 2009 dollars)	G (billions of 2009 dollars)
100	150	150	150
200	200	150	150
300	250	150	150
400	300	150	150
500	350	150	150
600	400	150	150
700	450	150	150
800	500	150	150
900	550	150	150

Question 4: The above table gives information for the nation of North Hampton. There are no imports to or exports from North Hampton.

a. [1 point] Find aggregate planned expenditure for each level of real GDP.

b. [1 point] What is the equilibrium level of aggregate expenditure?

Answer 1

a) Use the rule APE = C + I + G which gives, for example 500 + 150 + 150 = 800 when the real GDP is 800.

b) Since real GDP = APE = 800, this is the equilibrium level of income as well as aggregate expenditure.

Real GDP (billions of 2009 dollars)	C	I	G	Aggregate planned expenditure
	(billions of 2009 dollars)	(billions of 2009 dollars)	(billions of 2009 dollars)	(billions of 2009 dollars)
100	150	150	150	450
200	200	150	150	500
300	250	150	150	550
400	300	150	150	600
500	350	150	150	650
600	400	150	150	700
700	450	150	150	750
800	500	150	150	800
900	550	150	150	850