Figure 13-5

-Which of the following statements is true about equilibrium in the aggregate expenditures model?
I.Equilibrium is found at the level of real GDP at which the aggregate expenditures curve
Crosses the 45-degree line.
II.In equilibrium, real GDP produced equals aggregate expenditures.
III.In equilibrium, inventories equals zero.
IV.In equilibrium, real GDP produced equals potential real GDP.

Question

Figure 13-5
 
-Which of the following statements is true about equilibrium in the aggregate expenditures model?
I.Equilibrium is found at the level of real GDP at which the aggregate expenditures curve
Crosses the 45-degree line.
II.In equilibrium, real GDP produced equals aggregate expenditures.
III.In equilibrium, inventories equals zero.
IV.In equilibrium, real GDP produced equals potential real GDP.

Quizplus · Accepted Answer

Equilibrium in the aggregate expenditures model is found where the aggregate expenditures curve intersects the 45-degree line, which means that real GDP produced equals aggregate expenditures. Therefore, statements I and II are true. However, statement III is not necessarily true as inventories could be positive or negative at equilibrium. Statement IV is not directly related to equilibrium in the aggregate expenditures model.

Figure 13-5 -Which of the Following Statements Is True About Equilibrium in True