The income expenditure model is most relevant when
A) the economy is operating in the horizontal range of the aggregate supply curve.
B) aggregate supply equals aggregate demand.
C) the price level is changing.
D) the equilibrium level of GDP is less than the level of intended spending.
E) actual saving equals actual investment.

Question

Quizplus · Accepted Answer

The income expenditure model is most relevant when the economy is operating in the horizontal range of the aggregate supply curve, where output can increase without affecting the price level.

The Income Expenditure Model Is Most Relevant When