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Level Model

Posted on Sunday, September 12, 2010 in construction equipment

In the Keynesian income and expenditure model, the equilibrium level of GDP will occur:?

In the Keynesian income and expenditure model, the equilibrium level of GDP will occur:

A) at the full employment level of GDP
B) where the aggregate expenditure line intersects the 45 degree line
C) where the consumption and the saving function intersects the 45 degree line
D) where the MPC and MPS is greater than one

The answer is B. It can be under or above the full employment level. So A is not true. C and D are impossible.

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