At equilibrium GDP, savings must equal investment to achieve a balance between leakages and injections in the economy. In addition, aggregate demand and aggregate supply are also equal. This is because equilibrium GDP occurs where planned aggregate expenditure (which is equal to aggregate demand) is equal to actual output (which is equal to aggregate supply). Therefore, option B is the correct answer.

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At Equilibrium GDP

Question 9

Multiple Choice

At equilibrium GDP

A) Savings = investment,but aggregate demand does not equal aggregate supply.
B) Savings = investment and aggregate demand = aggregate supply.
C) Savings does not equal investment and aggregate demand does not equal aggregate supply.
D) Savings does not equal investment,but aggregate demand = aggregate supply.

Correct Answer: