At any given price level, equilibrium GDP on the expenditure side occurs when ____.
A)Y = C + I + G − (X − IM)
B)Y = C + I - G
C)Y = C + I + G + (X − IM)
D)Y = C + X + G + (X − IM)

Question

Quizplus · Accepted Answer

Equilibrium GDP on the expenditure side occurs when total expenditure (C+I+G+(X-IM)) equals total output (Y). Choice A is the formula for aggregate expenditure (or aggregate demand), but it doesn't necessarily equal equilibrium GDP. Choices B and D are missing net exports (X-IM) or include it incorrectly, which is an important component of total expenditure. Only choice C includes all four components of total expenditure correctly.

At Any Given Price Level, Equilibrium GDP on the Expenditure