Question

In Keynesian macroeconomic model, equilibrium is defined as that point at which

A. aggregate output equals consumption minus investment.
B. aggregate expenditure equals consumption.
C. saving equals consumption.
D. aggregate expenditure equals aggregate output.

Answer 1

In Keynesian macroeconomic model, equilibrium is defined as the point where aggregate expenditure equals aggregate output.

Step-by-step explanation:

In the Keynesian macroeconomic model, equilibrium is defined as the point where aggregate expenditure equals aggregate output. This is because GDP, which measures what is spent on final sales of goods and services in the economy, is equal to aggregate expenditure. The equilibrium can be determined using a Keynesian cross diagram, and it will occur along the 45-degree line where aggregate expenditure and output are equal.