When an economy is at its equilibrium level of output, we know that:
A) aggregate spending by the private sector equals the value of the output produced by the economy minus the capital consumption.
B) firms will not hold any inventories.
C) aggregate expenditure will always equal the value of the aggregate output produced by the economy.
D) consumption expenditures equal the total value of the goods produced by the economy.

Question

Quizplus · Accepted Answer

When an economy is at its equilibrium level of output, aggregate expenditure (which includes consumption, investment, government spending, and net exports) equals the value of the aggregate output produced by the economy. This means that all the goods and services produced have been purchased, and there is no unplanned inventory build-up or shortage.

When an Economy Is at Its Equilibrium Level of Output