An equilibrium level of real GDP is one for which

Question

Quizplus · Accepted Answer

Equilibrium level of real GDP is the level at which the aggregate quantity demanded equals aggregate quantity supplied. At this level, there is no excess demand or supply, and the economy is in a state of balance where the price level is stable. Option A is incorrect because consumption may not always equal disposable income. Option B is incorrect because aggregate purchases include investment, government spending, and net exports, and not just consumption. Option D is incorrect because at equilibrium, one of the statements mentioned in the options must be true, i.e., C must be correct.

An Equilibrium Level of Real GDP Is One for Which