Equilibrium expenditure is the level of aggregate expenditure when
A) aggregate production equals real GDP.
B) aggregate actual expenditure equals real GDP.
C) aggregate planned expenditure equals real GDP.
D) aggregate private expenditure equals real GDP.
E) planned inventory investment equals zero.

Question

Quizplus · Accepted Answer

Equilibrium expenditure is the level of aggregate expenditure when the aggregate planned expenditure equals real GDP. This is because at this level of expenditure, there is no unplanned change in inventory levels, which signals that the economy is in a state of equilibrium.

Equilibrium Expenditure Is the Level of Aggregate Expenditure When