The economy's real GDP level and aggregate expenditures level can be identified in the aggregate expenditures model by the:
A) intersection of the aggregate demand curve and the aggregate supply curve.
B) sum of consumer expenditures, government purchases, and unplanned investments.
C) national income minus savings.
D) point where the aggregate expenditures line intersects the 45-degree line.

Question

Quizplus · Accepted Answer

The aggregate expenditures model determines the economy's equilibrium real GDP level at the point where the aggregate expenditures line intersects the 45-degree line, which represents all points where aggregate expenditures equal total output or income.

The Economy's Real GDP Level and Aggregate Expenditures Level Can