In Figure 1 above the Keynesian equilibrium occurs at what output level?
A) Y1
B) Y2
C) Y3
D) it does not occur at any output level in the graph.

Question

In Figure 1 above the Keynesian equilibrium occurs at what output level?
A) Y1 
B) Y2 
C) Y3 
D) it does not occur at any output level in the graph.

Quizplus · Accepted Answer

Keynesian equilibrium occurs where aggregate demand intersects the 45-degree line, which is at output level Y2 in the graph. At this output level, aggregate demand equals aggregate supply, and there are no inherent forces pushing the economy in a different direction.

In Figure 1 Above the Keynesian Equilibrium Occurs at What