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Answer :
The equilibrium level of real GDP is $250. To determine the equilibrium level of real GDP, we need to consider the relationship between autonomous consumption and autonomous planned investment and the marginal propensity to consume (MPC).
Autonomous consumption refers to the level of consumption that occurs even when there is no income. In this case, the autonomous consumption is $5.
Autonomous planned investment represents the level of investment that occurs regardless of changes in income. Here, the autonomous planned investment is $200.
The marginal propensity to consume (MPC) measures the change in consumption resulting from a change in income. In this scenario, the MPC is 18/20 or 0.9, which means that for every additional dollar of income, individuals will consume 90 cents.
In equilibrium, aggregate spending (consumption + investment) equals real GDP. Since there are no taxes or imports considered, aggregate spending is equal to autonomous consumption plus autonomous planned investment.
Equilibrium GDP can be calculated using the formula:
GDP = (Autonomous consumption + Autonomous planned investment) / (1 - MPC)
Substituting the given values into the equation:
GDP = ($5 + $200) / (1 - 0.9) = $205 / 0.1 = $2050
Therefore, the equilibrium level of real GDP is $250.
To learn more about GDP, click here: brainly.com/question/30581262
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