Equilibrium in the goods market requires that

Question

Quizplus · Accepted Answer

Equilibrium in the goods market is achieved when production, or output, is equal to the level of aggregate demand. This is because in the goods market, firms produce output in response to demand from consumers, investors, and the government. If demand is too low, firms will cut back on production and employment, which will reduce income and further weaken demand. If demand is too high, firms will increase production and employment, which will boost income and support further spending. Therefore, equilibrium in the goods market is essential for stable economic growth and low unemployment.

Equilibrium in the Goods Market Requires That