Equilibrium real GDP is
A) independent of the price level
B) determined solely in the loanable funds market
C) controlled by the Fed
D) directly related to the interest rate
E) the level of output at which total spending equals total output for a given price level

Question

Quizplus · Accepted Answer

Equilibrium real GDP is the level of output where all planned expenditures by households, businesses, government, and foreign buyers add up to the total amount of output produced at a given price level. It is not affected by the actions of the Fed or the interest rate, but rather by the total amount of spending in the economy. Therefore, the correct option is E.

Equilibrium Real GDP Is