Consider the Keynesian cross shown here. At the real GDP level of $31 billion, aggregate expenditures are:
A)$37 billion.
B)$33 billion.
C)$41 billion.
D)$43 billion.

Question

Consider the Keynesian cross shown here. At the real GDP level of $31 billion, aggregate expenditures are: 
A)$37 billion. 
B)$33 billion. 
C)$41 billion. 
D)$43 billion.

Quizplus · Accepted Answer

From the Keynesian cross diagram, at the real GDP level of $31 billion, the aggregate expenditures (AE) line intersects the 45-degree line at the level of $33 billion. This means that at that level of GDP, planned aggregate expenditures (PAE) are equal to actual output. Therefore, the answer is B, which corresponds to the level of aggregate expenditures at the GDP level of $33 billion.

Consider the Keynesian Cross Shown Here