The figure shows planned aggregate expenditure and output for an economy. The Keynesian equilibrium occurs at what output level? A) Y ₁ B) Y ₂ C) Y ₃ D) It does not occur at any output level in this graph.

Question

Quizplus · Accepted Answer

The Keynesian equilibrium occurs where the planned aggregate expenditure curve intersects the 45-degree line. In this graph, that occurs at point ₂, which is an output level of $12 trillion. Therefore, the answer is B.

The Figure Shows Planned Aggregate Expenditure and Output for an Economy