In macroeconomics, equilibrium is defined as that point at which
A) saving equals consumption.
B) planned aggregate expenditure equals aggregate output.
C) planned aggregate expenditure equals consumption.
D) aggregate output equals consumption minus investment.

Question

Quizplus · Accepted Answer

Equilibrium in macroeconomics is typically defined as the point where planned aggregate expenditure (which includes consumption, investment, government spending, and net exports) equals aggregate output (which is the same as GDP). At this point, there is no excess demand or supply in the economy, and resources are efficiently allocated. Option A is not correct because saving does not play a direct role in determining equilibrium in the short run, although it may affect long-term growth. Option C is not correct because planned aggregate expenditure comprises more than just consumption. Option D is not correct because aggregate output is the sum of consumption, investment, government spending, and net exports, not just consumption minus investment.

In Macroeconomics, Equilibrium Is Defined as That Point at Which