Refer to the diagram below.The equilibrium condition for a private closed economy is I_g = S.

Question

Quizplus · Accepted Answer

The equation I_g = S represents the equilibrium condition for a private closed economy, where IS represents investment and saving, U1 represents the potential output level, B1 represents the full-employment level of output, and gS1 and gS0 represent the marginal propensity to save. When this equation is satisfied, the economy is in equilibrium, with no excess demand or supply in the goods and services market.

Refer to the Diagram Below