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. What is the amount of consumption when real GDP is $6,000 billion?

A) 1,000 billion
B) 2,000 billion
C) 3,000 billion
D) 4,000 billion