Question
n the aggregate expenditures model, equilibrium occurs if:
consumption equals investment.
inventory equals investment.
aggregate expenditures equal consumption.
aggregate expenditures equal disposable income.
consumption equals investment.
inventory equals investment.
aggregate expenditures equal consumption.
aggregate expenditures equal disposable income.
Answers
GPT-5 mini
Aggregate expenditures equal disposable income.
Reason: equilibrium in the AE model occurs when planned spending equals actual output (income). In the simple model with no taxes, disposable income = income, so AE = Y (i.e. AE = disposable income).
Reason: equilibrium in the AE model occurs when planned spending equals actual output (income). In the simple model with no taxes, disposable income = income, so AE = Y (i.e. AE = disposable income).