Answer to Question #62331 in Macroeconomics for Gian

Question

In the Keynesian cross model ...
(a) income always equals GDP.
(b) actual expenditure always equals GDP.
(c) planned expenditure always equals GDP.
(d) actual expenditure does not necessarily equals GDP.

Answer 1

The Keynesian cross diagram demonstrates the relationship between aggregate demand (shown on the vertical axis) and real GDP (shown on the horizontal axis, measured by output).
So, in the Keynesian cross model actual expenditure does not necessarily equals GDP.
So, the correct answer is (d) actual expenditure does not necessarily equals GDP.