Macroeconomic equilibrium requires
A)equilibrium in the goods market.
B)equilibrium in the money market.
C)equilibrium in both the goods and money markets.
D)equilibrium in neither the goods nor the money market.

Question

Quizplus · Accepted Answer

Macroeconomic equilibrium requires both equilibrium in the goods market and equilibrium in the money market. In the goods market, the quantity of goods supplied equals the quantity of goods demanded, while in the money market, the quantity of money supplied equals the quantity of money demanded. Both of these markets must be in equilibrium for the macroeconomy to be in equilibrium. Therefore, the correct answer is C, equilibrium in both the goods and money markets. A and B only represent partial equilibrium, while D is not a feasible possibility for macroeconomic equilibrium.

Macroeconomic Equilibrium Requires