Question
Within the simple Keynesian Cross model, equilibrium takes place:
at full employment.
when aggregate spending equals real disposable income.
when the money interest rate and real interest rate are equal.
when actual and expected rates of inflation are equal.
at full employment.
when aggregate spending equals real disposable income.
when the money interest rate and real interest rate are equal.
when actual and expected rates of inflation are equal.
Answers
GPT-5 mini
Correct answer: when aggregate spending equals real disposable income.
Explanation: In the Keynesian Cross equilibrium output (Y) is the level at which planned aggregate expenditure equals actual output (income) so there are no unplanned inventory changes. The other options are not required by the simple Keynesian Cross: full employment need not hold, interest rates and inflation expectations are not part of the basic model.
Explanation: In the Keynesian Cross equilibrium output (Y) is the level at which planned aggregate expenditure equals actual output (income) so there are no unplanned inventory changes. The other options are not required by the simple Keynesian Cross: full employment need not hold, interest rates and inflation expectations are not part of the basic model.