Question

Which of the following is an equilibrium condition for the goods market in the short-run ?#randomize...

Which of the following is an equilibrium condition for the goods market in the short-run ?#randomize
A. measured savings equal measured investment
B. Desired savings equal desired investment
C. Money demand equals money supply
D. Consumption equals savings

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Answer #1

In the short run the equilibrium condition for the goods market is that the desired savings equal desired investment. It can also be said alternatively that in the short run the equilibrium condition for the goods market is that the the leakages in Expenditure(desired savings) must equal to injections in Expenditure (desired investing).

Hence, desired savings equal desired investment is an equilibrium condition for the goods market in the short run.

Therefore, option B is correct.

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