The figure given below shows the aggregate expenditure curve of an open economy. Figure 10.1 In the figure:
C₁: Consumption
I₁: Investment
G₁: Government spending
X₁: Net Exports
According to Figure 10.1, when real GDP is at G:

Question

The figure given below shows the aggregate expenditure curve of an open economy. Figure 10.1

In the figure:
C₁: Consumption
I₁: Investment
G₁: Government spending
X₁: Net Exports
According to Figure 10.1, when real GDP is at G:

Quizplus · Accepted Answer

At point G, aggregate expenditures (AE) are equal to real GDP, indicating that the economy has achieved macroeconomic equilibrium. There is no pressure for the economy to expand or contract at this point. Moreover, there are no unplanned reductions or increases in inventory as firms are producing goods and services at a level that meets the demand in the economy at point G.

The Figure Given Below Shows the Aggregate Expenditure Curve of an Open