Difficulty: Medium Figure 13-4

Multiple Choice

Difficulty: Medium Figure 13-4
-Refer to Figure 13-4. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption,
I_P = Planned Investment. Suppose AE = C + I_P. I_P is autonomous and the consumption function is C = $1,000 billion + 0.5Y. If real GDP = $7,000 billion, what is the amount of aggregate expenditures?

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