Question

In the circular flow of income, Keynesian equilibrium obtains when a) All the individual sectors are in equilibrium: S=I, T=G, M=X b) The aggregate injections equal aggregate withdrawals S+T+M = I+G+X c) There is no inflation or unemployment d) The interest rate and exchange rate are at their market clearing levels

Answer 1

Answer:

The answer is B:

The aggregate injections equal aggregate withdrawals S+T+M = I+G+X.

Explanation:

In the circular flow of income, Keynesian equilibrium obtains when The aggregate injections equal aggregate withdrawals S+T+M = I+G+X.

Where S = Saving

T = Taxes

Imports = (M)

I = Investments

G = Government spending

X = Exports

An equilibrium is approached when there is a balance between the savings, taxes and imports and investments, government spendings and exports.