In a simple macro model with no government and no foreign trade,the equilibrium level of national income is the level of income at which
A)aggregate desired expenditure is greater than actual national income.
B)aggregate desired expenditure equals actual national income.
C)aggregate desired expenditure equals consumer spending.
D)saving equals income.
E)saving equals consumer spending.

Question

Quizplus · Accepted Answer

In a simple macro model with no government and no foreign trade, the equilibrium level of national income is achieved when aggregate desired expenditure equals actual national income. This occurs because any difference between the two would cause firms to either increase or decrease production, eventually resulting in the two being equal at equilibrium. Therefore, choice B is the correct answer.

In a Simple Macro Model with No Government and No