When the economy is in equilibrium,

Question

Quizplus · Accepted Answer

When the economy is in equilibrium, it means that there is no excess demand or supply in the market, and actual output is equal to potential output. In such a situation, planned investment will equal actual investment because firms will produce and invest based on what consumers are willing to spend. However, choices A, B, and C are incorrect. Planned savings may or may not be zero depending on the preferences of households. Changes in autonomous spending will have an impact on real GDP as it is a component of aggregate demand. Lastly, there can still be some degree of unemployment in the economy even when it is in equilibrium.

When the Economy Is in Equilibrium