In the Keynesian Cross model, the equilibrium national output is determined at the point where:
A) autonomous consumption is equal to investment.
B) the 45° line intersects the aggregate demand line.
C) the planned expenditure line is horizontal.
D) the aggregate demand line intersects the aggregate supply curve.

Question

Quizplus · Accepted Answer

In the Keynesian Cross model, the equilibrium national output is determined at the point where the 45° line (which represents all points where aggregate output, or income, equals aggregate expenditure) intersects the aggregate demand line (or planned expenditure line). This intersection point shows the level of output where planned spending equals actual output, indicating equilibrium.

In the Keynesian Cross Model, the Equilibrium National Output Is