Macroeconomic equilibrium occurs when:
A)aggregate expenditure = GDP.
B)aggregate expenditure = C + I + G + NX.
C)real GDP = potential GDP.
D)aggregate income = planned inventories.

Question

Quizplus · Accepted Answer

Macroeconomic equilibrium occurs when aggregate expenditure, which is the sum of consumption, investment, government spending, and net exports, is equal to GDP. This means that there is no unplanned change in inventories and the economy is running at a stable level. Real GDP equal to potential GDP is an indication of full employment, while aggregate income equal to planned inventories shows only a point on the production possibility frontier, but does not necessarily indicate macroeconomic equilibrium.

Macroeconomic Equilibrium Occurs When