Equilibrium expenditure occurs where
A) the aggregate expenditure curve crosses the 45-degree line.
B) planned expenditures exceed national income.
C) savings exceed planned investment.
D) All of the answers are correct.

Question

Quizplus · Accepted Answer

Equilibrium expenditure in an economy occurs at the point where the aggregate expenditure curve intersects the 45-degree line. This intersection point represents where planned spending (or aggregate expenditure) equals total output or income, ensuring that all produced goods and services are purchased, with no unplanned inventory changes. Choices B and C describe situations of disequilibrium.

Equilibrium Expenditure Occurs Where