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      Question

      According to Keynesian theory, the equilibrium level of

      income and output in an economy is determined by the intersection of:
      A Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS) Correct Answer Incorrect Answer
      B Aggregate Demand (AD) and Aggregate Supply (AS) Correct Answer Incorrect Answer
      C Total Investment and Government Spending Correct Answer Incorrect Answer
      D Money Supply and Interest Rates Correct Answer Incorrect Answer

      Solution

      Both the AD–AS approach and the Saving–Investment approach lead to the same equilibrium level of national income.

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