Equilibrium expenditure occurs where
A) the aggregate expenditure curve crosses the 45-degree line.
B) savings exceed planned investment.
C) planned expenditures exceed national income.
D) All of the answers are correct.

Question

Quizplus · Accepted Answer

Equilibrium expenditure occurs where the aggregate expenditure curve crosses the 45-degree line, which represents the equal amount of national income and aggregate expenditure. At this point, there is neither excess demand nor excess supply in the economy. Therefore, option A is the correct answer. Options B and C describe situations that would prevent the achievement of equilibrium expenditure. Option D is incorrect, as only option A is correct.

Equilibrium Expenditure Occurs Where