Equilibrium expenditure occurs when
A) aggregate planned expenditure equals real GDP.
B) disposable income equals real GDP.
C) disposable income equals consumption expenditures plus imports.
D) real GDP plus net taxes equals disposable income.
E) real GDP minus net taxes equals disposable income.

Question

Quizplus · Accepted Answer

Equilibrium expenditure occurs when aggregate planned expenditure equals real GDP. This is because in equilibrium, there is no unplanned inventory investment, and thus aggregate planned expenditure (which includes consumption expenditure, investment expenditure, government expenditure, and net exports) is equal to real GDP.

Equilibrium Expenditure Occurs When