If national income is demand-determined,the condition for national income to be in equilibrium can be stated as
A)unemployment must equal the natural unemployment rate.
B)AE must be greater than Y.
C)desired saving equals actual investment.
D)actual saving equals actual investment.
E)desired aggregate expenditure equals the actual level of national income.

Question

Quizplus · Accepted Answer

National income is demand-determined means that the level of aggregate demand determines the level of output and income in the economy. Therefore, for equilibrium, the desired aggregate expenditure, which is the sum of consumption, investment, government spending, and net exports, must be equal to the actual level of national income. This is because any excess demand or supply in the economy will lead to changes in price levels until equilibrium is reached.

If National Income Is Demand-Determined,the Condition for National Income to Be