In the simple Keynesian model, the economy is in equilibrium when A) Y = C + I and S I. C) Y = C + I and S = I. D) Y = C and S = 0.

Question

In the simple Keynesian model, the economy is in equilibrium when
A) Y = C + I and S < I.
B) Y = C + I and S > I.
C) Y = C + I and S = I.
D) Y = C and S = 0.

Quizplus · Accepted Answer

In the simple Keynesian model, the equilibrium condition is Y = C + I, where Y is the level of output, C is consumption, and I is investment. At equilibrium, the level of saving (S) must be equal to the level of investment (I), which is represented by S = I. Therefore, the correct answer is C, which states that Y = C + I and S = I, indicating that the economy is in equilibrium.

In the Simple Keynesian Model, the Economy Is in Equilibrium