Equilibrium expenditure is defined as the level of aggregate expenditure where
A) spending equals output.
B) total inventories equal zero.
C) actual aggregate expenditure equals real GDP.
D) aggregate planned expenditure equals real GDP.

Question

Quizplus · Accepted Answer

Equilibrium expenditure occurs when aggregate planned expenditure (which includes consumption, investment, government spending, and net exports) equals real GDP. This represents the point where aggregate demand equals aggregate supply in the economy.

Equilibrium Expenditure Is Defined as the Level of Aggregate Expenditure