The Keynesian equilibrium occurs when:
A) planned inventories are equal to actual inventories.
B) planned investment is equal to domestic consumption.
C) national capital investment is equal to planned aggregate expenditure.
D) planned spending is equal to expected household spending.

Question

Quizplus · Accepted Answer

The Keynesian equilibrium is defined as the point where planned (or intended) investment or spending by firms on inventories equals the actual inventories. This means that the goods produced are being sold at the rate firms expected, indicating no unplanned inventory accumulation or depletion, which is a condition for macroeconomic equilibrium in the Keynesian framework.

The Keynesian Equilibrium Occurs When