Only when the goods market is in equilibrium is it true that ________.
A)actual expenditure equals output
B)the amount of goods and services produced equals actual expenditure
C)planned expenditure equals the amount of goods and services produced
D)demand for foreign goods equals foreigners' demand for domestic goods
E)none of the above

Question

Quizplus · Accepted Answer

In the goods market, planned expenditure represents the demand for goods and services while output represents the supply of goods and services. When the goods market is in equilibrium, it means that planned expenditure (demand) is equal to the amount of goods and services produced (supply), therefore choice C is correct. Actual expenditure (choice A) may only be equal to output when the economy is in equilibrium in both the goods and the financial markets. Choice B is also incorrect because output only represents the supply of goods and services, not actual expenditure. Choice D is not relevant to the goods market equilibrium.

Only When the Goods Market Is in Equilibrium Is It