Equilibrium expenditure is
A) the amount of aggregate expenditure when aggregate planned expenditure equals real GDP.
B) when unplanned inventory change is positive.
C) the amount of aggregate expenditure when aggregate planned expenditure exceeds real GDP.
D) the amount of aggregate expenditure when aggregate planned expenditure is less than real GDP.
E) when unplanned inventory change is zero or negative.

Question

Quizplus · Accepted Answer

Equilibrium expenditure occurs when aggregate planned expenditure (the sum of consumption, investment, government spending, and net exports) equals real GDP. This means there are no unplanned inventory changes and the economy is in a stable state.

Equilibrium Expenditure Is