Question 1
EasyOriginal questionIn the simple Keynesian model, equilibrium income is where
Show the answer and explanation
CorrectNot quiteAnswer B
Correct answer: B
Explanation
Firms produce what they expect to sell. When planned spending matches output, there is no reason to change output.
Worth noting
Saving is zero at the break-even income, which is not the equilibrium unless investment is zero.
- Concept
- Equilibrium condition
- Typical timeTypical
- 40 s
- Your timeYours
- —
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