Keynesian model

Question 1

Equilibrium level

Answer 1

Equilibrium occurs when none of the participants have any incentive to change their behavior. things will therefore remain the same.

Question 2

possible relationships

A Denotes Aggregate demand/ spending

Y denotes total production , output or income

i Denotes investment spending

C denotes Consumption expenditure

Answer 2

A=Y denotes equilibrium level of production + income

A Greater Y denotes a disequilibrium total spending is greater than total production

A Smaller Y Denotes disequilibrium TS lower than total production or income

C + i = Y

Question 3

Consumption

Answer 3

Consumption is measured along the vertical axis

Total production or income Y is measured along the horizontal axis