Equilibrium in the full Keynesian model requires that
A) all injections (I + G + X) must equal all withdrawals (S + T + M).
B) income exceed expenditures.
C) expenditures exceed income.
D) the government budget be balanced.

Question

Quizplus · Accepted Answer

Equilibrium in the full Keynesian model requires that total injections (I + G + X) equal total withdrawals (S + T + M) in order for there to be no excess demand or supply in the economy. This is known as the Keynesian Cross model, and it is a simplified representation of the full Keynesian model. Option B and C describe a situation where the economy is either in surplus or deficit, which would cause imbalances and adjustments in the economy. Option D is not necessarily relevant to the equilibrium condition in the Keynesian model.

Equilibrium in the Full Keynesian Model Requires That