CA Foundation P4 · Chapter 5 · Question 13 of 15
In the two-sector Keynesian model, equilibrium income is attained where:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Planned saving equals planned investment
Explanation
Equilibrium requires aggregate demand (C + I) to equal aggregate supply (C + S), i.e., planned (ex-ante) S = planned I. Actual (ex-post) saving always equals actual investment by accounting identity, including unplanned inventory changes, so it does not define equilibrium.
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