Question : In the Keynesian theory of income determination, equilibrium income is achieved when:
Option 1: Aggregate demand equals aggregate supply
Option 2: Consumption equals savings
Option 3: Investment equals savings
Option 4: Leakages equal injections
Correct Answer: Investment equals savings
Solution : The correct answer is (c) Investment equals savings
In the Keynesian framework, equilibrium income occurs when the total amount of planned investment in an economy is equal to the total amount of savings. This equality between investment and savings ensures that there is no unplanned accumulation or depletion of inventories, leading to a stable level of income.
Therefore, "Investment equals savings" for achieving equilibrium income in the Keynesian theory of income determination. Thank you for pointing out the correct response, and I apologize for any confusion caused.
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