The equilibrium level of aggregate planned expenditure is found where
A) there is no saving and no dissaving.
B) aggregate planned expenditure equals real GDP.
C) net exports is zero.
D) autonomous expenditure equals equilibrium expenditure.
E) the price level is rising at a constant rate.

Question

Quizplus · Accepted Answer

The equilibrium level of aggregate planned expenditure is when aggregate planned expenditure is equal to real GDP. This is because at this level, there is no tendency for the economy to either expand or contract. Any deviation from this level will cause either inflationary or recessionary pressures, forcing the economy to readjust to the equilibrium level.

The Equilibrium Level of Aggregate Planned Expenditure Is Found Where