For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

Question

Quizplus · Accepted Answer

This is the Keynesian "circular flow" model, where total output (GDP) is equal to total expenditures (C+I+G+NX). The saving-investment approach also shows that savings equals investment in the economy, and at equilibrium, these two are equal. Therefore, both approaches yield the same GDP level at equilibrium.

For Given Data the Aggregate Expenditures-Domestic Output and the Saving-Investment