00:01
So here we have a question about macroeconomic expenditure equilibrium, right? and aggregate expenditure is the desired spending on each of the components of output.
00:14
It's how much people want to spend on consumption, how much people want to spend on investment, how much the government plans to send, and the planned balance of our net exports, right? equilibrium in the economy is when aggregate expenditure, is equal to income, right? well, where does aggregate expenditure equal to income? along this straight line from the origin, right? this line characterizes all the points where the horizontal axis equals the vertical axis, right? this is like here, say, five and five, right? and then so on and so forth, up that line under one -to -one ratio.
00:53
So this point where aggregate expenditure equals actual production is expenditure equilibrium.
01:00
If we're not at this point, firms are producing more than people wanna buy, which is not sustainable.
01:06
Or people are buying more than is being produced, which is not sustainable, right? so which of these are true? a, it is income where aggregate expenditure equals y.
01:23
This is just basically the definition of expenditure equilibrium.
01:32
Remember, some of these functions, like c especially are a function of national income, right? so they depend on the level of why.
01:39
That's why the c plus i plus g plus and x line is sloping up, right? so b, no shortage or surplus.
01:49
That's again, basically the definition of aggregate expenditure equilibrium.
01:55
It's where the total planned expenditure is equal to the amount of production, right? c, it is the income where...