How is macroeconomic equilibrium characterized ?
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Answer: C. Planned aggregate expenditure equals aggregate output
Explanation
Macroeconomic equilibrium occurs when aggregate demand equals total economic output. Planned aggregate expenditure dictates production levels in the short run. Unplanned inventory changes disappear when macroeconomic equilibrium is successfully attained. Aggregate expenditure comprises consumption investment government purchases and net exports. Gross domestic product measures the total aggregate output produced within an economy. Keynesian cross models illustrate how equilibrium output is determined by spending.
Central banks monitor aggregate expenditure to prevent recessions and inflation. Fiscal policy adjustments influence aggregate demand to restore macroeconomic balance. Economic recessions happen when planned expenditure falls short of aggregate output. Option a incorrectly subtracts investment from consumption in the equilibrium condition. Option b misrepresents saving and consumption relationships in macroeconomic models. Option d omits investment and government spending from total aggregate expenditure.
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