In the most basic model of the economy, equilibrium output is achieved when:

Question

Quizplus · Accepted Answer

Equilibrium output is achieved when total expenditures (C+I+G+X-M) equal output (Y). This is because output represents the total amount of goods and services produced in an economy, and expenditures represent the total amount of income used to purchase those goods and services. Therefore, in order for the economy to be in equilibrium, the amount of goods and services produced must be equal to the amount of income used to purchase them.

In the Most Basic Model of the Economy, Equilibrium Output