In a closed economy, real Gross Domestic Product (GDP) is at equilibrium occurs where

Question

Quizplus · Accepted Answer

Real GDP is at equilibrium when the planned expenditures (C + I + G) are equal to national income, which is represented by the 45-degree line. Therefore, option A is correct. Options B and C describe situations of national income being either too low or too high in relation to planned expenditures, which would not represent an equilibrium. Option D is incorrect as only option A is correct.

In a Closed Economy, Real Gross Domestic Product (GDP) Is