Equilibrium expenditure occurs where the aggregate expenditure curve crosses the
A) vertical axis.
B) horizontal axis.
C) 45-degree line.
D) consumption function.

Question

Quizplus · Accepted Answer

Equilibrium expenditure occurs where the aggregate expenditure curve intersects the 45-degree line, which represents the equality between aggregate expenditure and output. At this point, planned expenditure equals actual output, and the economy is in a state of macroeconomic equilibrium.

Equilibrium Expenditure Occurs Where the Aggregate Expenditure Curve Crosses the