According to Keynes,if injections equal leakages,
A)The economy will always stabilize at full employment.
B)Macroeconomic equilibrium will occur.
C)Macroeconomic equilibrium will not occur.
D)Microeconomic instability will persist.

Question

Quizplus · Accepted Answer

According to Keynes, when injections (i.e., government spending, investment, and exports) equal leakages (i.e., savings, taxes, and imports), the economy will be in macroeconomic equilibrium. In this case, total output, income, and employment will remain stable without any upward or downward pressure. However, if injections exceed leakages, the economy will experience inflation, while if leakages exceed injections, the economy will suffer from recession and unemployment.

According to Keynes,if Injections Equal Leakages