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In a mixed open economy, the equilibrium GDP exists where
In a mixed open economy, the equilibrium GDP exists whereA. Ca + Ig + Xn intersects the 45-degree line.
B. Ca + Ig = Sa + T + X.
C. Ca + Ig + Xn + G = GDP.
D. Ca + Ig + Xn = Sa + T.
Final answer:The equilibrium GDP in a mixed open economy exists where the sum of autonomous consumption, planned investment, net exports, and government spending (C) (Ca + Ig + Xn + G) equals the GDP.Explanation:The equilibrium GDP in a mixed open economy is reached when total spending and output (national income) are equal. Option C, where Ca + Ig + Xn + G = GDP, appropriately represents the requirement for equilibrium. Here, net exports (exports less imports) is represented by Xn, autonomous consumption (Ca), planned investment (Ig), and government spending (G). According to this requirement, the economy's total expenditure on government, net exports, investment, and consumption must match its entire output (GDP) in order for there to be equilibrium.When looking at graphical representations like the Keynesian Cross Diagram, equilibrium occurs where the aggregate expenditure curve intersects the 45-degree line which signifies points where aggregate expenditure equals real GDP. This intersection is the only point where the amount being spent is exactly equal to what is produced in the economy, and in the specific examples provided, this equilibrium GDP happens at $6,000....