In the Keynesian-cross model, the equilibrium level of income is determined by:
A) the factors of production.
B) the money supply.
C) planned spending.
D) liquidity preference.

Question

Quizplus · Accepted Answer

In the Keynesian-cross model, the equilibrium level of income is determined by planned spending, which includes consumption spending, investment spending, government spending, and net exports. Therefore, choice C, planned spending, is the correct answer. The factors of production (choice A) and liquidity preference (choice D) are important concepts in Keynesian economics, but they do not directly determine the equilibrium level of income in the Keynesian-cross model. The money supply (choice B) is not explicitly included in the model, although changes in the money supply can affect the level of planned spending through changes in interest rates and borrowing costs.

In the Keynesian-Cross Model, the Equilibrium Level of Income Is