In the Keynesian model, when is the economy in short-run equilibrium?
A) when there is no inflation
B) when there is full employment
C) when there is a balanced federal budget
D) when total spending (demand) is equal to production (supply)

Question

Quizplus · Accepted Answer

In the Keynesian model, short-run equilibrium occurs when the level of total spending (demand) in the economy is equal to the level of production (supply). This means that there is no excess demand or excess supply in the economy, and it is considered to be operating at its potential output level. Options A, B, and C are not indicative of short-run equilibrium.

In the Keynesian Model, When Is the Economy in Short-Run