Equilibrium expenditure occurs when
A)consumption equals real GDP.
B)aggregate planned expenditure equals real GDP.
C)aggregate planned expenditure equals consumption.
D)induced consumption equals aggregate planned expenditure.
E)the price level equals 100.

Question

Quizplus · Accepted Answer

Equilibrium expenditure occurs when aggregate planned expenditure equals real GDP. This is because at the equilibrium level of output, there is no unintended changes in inventories, and therefore Aggregate Planned Expenditure (APE) or Aggregate Demand (AD) equals Real Gross Domestic Product (GDP).

Equilibrium Expenditure Occurs When