Refer to the accompanying consumption schedule in an economy

Refer to the accompanying consumption schedule in an economy. All figures are in billions of dollars. If gross investment is $34 billion, net exports are zero, and there is a lump-sum tax of $30 billion at all levels of GDP, then the after-tax equilibrium level of GDP will be

$590 billion.

$540 billion.

$490 billion.

$640 billion.

Solution

Solution-

Refer to the accompanying consumption schedule in an economy. All figures are in billions of dollars. If gross investment is $34 billion, net exports are zero, and there is a lump-sum tax of $30 billion at all levels of GDP, then the after-tax equilibrium level of GDP will be $540 billion.

The correct option is B. $540 billion.

Reason-

Equilibrium GDP is where GDP and consumption equal

First equilibrium gdp is $490

next is 490 + 34 + 6 = 540.