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In the equilibrium equation, what does the RHS represent?

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Question

In the equilibrium equation, what does the RHS represent?

Options

  • Planned (Ex-ante) Output

  • Planned aggregate demand

  • Actual Output (Ex-post) only

  • Disposable Income only

MCQ
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Solution

The RHS of the equilibrium equation represents planned aggregate demand. It equals planned (Ex-ante) Output only at equilibrium.

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