In the Keynesian-cross model, actual expenditures equal:
A) GDP.
B) the money supply.
C) the supply of real balances.
D) unplanned inventory investment.

Question

Quizplus · Accepted Answer

In the Keynesian-cross model, actual expenditures (AE) equal GDP. This is represented by the equation AE=C+I+G+(X-M), where C represents consumption, I represents planned investment, G represents government spending, and (X-M) represents net exports. The sum of these components equals actual expenditures, which is also equal to GDP in equilibrium.

In the Keynesian-Cross Model, Actual Expenditures Equal