Equilibrium expenditure occurs when
A)consumption equals real GDP.
B)aggregate planned expenditure equals real GDP.
C)aggregate planned expenditure equals consumption.
D)induced consumption equals aggregate planned expenditure.
E)none of the above.

Question

Quizplus · Accepted Answer

Equilibrium expenditure occurs when aggregate planned expenditure equals real GDP, because at this point, there is no unplanned inventory accumulation or shortfall, and the economy is in a stable state. Option A, C, and D are not true statements about equilibrium expenditure.

Equilibrium Expenditure Occurs When