In the Keynesian view, equilibrium takes place when
A) the real and nominal interest rates are equal.
B) the level of total spending in the economy is equal to current output.
C) current output is equal to the economy's long-run potential.
D) the money supply is growing at a constant rate.

Question

Quizplus · Accepted Answer

In the Keynesian view, equilibrium takes place when the level of total spending in the economy is equal to current output. This is because Keynesian economics emphasizes the role of aggregate demand in driving the economy, and argues that in the short run, fluctuations in aggregate demand can lead to unemployment or inflation. Therefore, achieving equilibrium between total spending and current output is a key objective of macroeconomic policy.

In the Keynesian View, Equilibrium Takes Place When