At equilibrium real GDP in a private closed economy,
A) the MPC must equal the APC.
B) the slope of the aggregate expenditures schedule equals the MPS.
C) aggregate expenditures and real GDP are equal.
D) planned saving and consumption are equal.

Question

Quizplus · Accepted Answer

At equilibrium in a private closed economy, aggregate expenditures (which equal consumption plus planned investment) and real GDP are equal. This is because firms will produce the amount of output that consumers are willing to purchase and invest in, and this level of output is equal to the equilibrium level of real GDP. The other options are either incorrect or irrelevant to the determination of equilibrium GDP.

At Equilibrium Real GDP in a Private Closed Economy