Income-expenditure equilibrium real GDP is the level of real GDP at which:

Question

Quizplus · Accepted Answer

Income-expenditure equilibrium real GDP is the level of real GDP where planned aggregate spending (which includes consumption, investment, government spending, and net exports) equals actual output. This means there are no unplanned changes in inventories, and the economy is in a state of equilibrium. While lower unemployment may be associated with higher real GDP, it is not a defining characteristic of income-expenditure equilibrium. Savings and autonomous consumption also do not necessarily have to equal planned investment for income-expenditure equilibrium to occur.

Income-Expenditure Equilibrium Real GDP Is the Level of Real GDP