Figure 12-1
-Refer to Figure 12-1.If the economy is at a level of aggregate expenditure given by point K,then
A)the economy is in equilibrium.
B)production is greater than spending.
C)production is less than spending.
D)inventories will increase above their desired level.

Question

Figure 12-1 
-Refer to Figure 12-1.If the economy is at a level of aggregate expenditure given by point K,then
A)the economy is in equilibrium. 
B)production is greater than spending. 
C)production is less than spending. 
D)inventories will increase above their desired level.

Quizplus · Accepted Answer

At point K, the aggregate expenditure is equal to the level of production, indicating that the economy is in equilibrium. Therefore, A is the correct choice. B and C both indicate an imbalance between production and spending, but this is not the case at point K. D is also incorrect as inventories will remain at their desired level at equilibrium.

Figure 12-1 -Refer to Figure 12-1.If the Economy Is at a Level