The Keynesian cross shows: A) determination of equilibrium income and the interest rate in the short run. B) determination of equilibrium income and the interest rate in the long run. C) equality of planned expenditure and income in the short run. D) equality of planned expenditure and income in the long run.

C. Equality of planned expenditure and income in the short-run

Explanation:

The Keynesian cross shows equality of planned expenditure and income in the short-run

The Keynesian Cross plots aggregate income(Y) on the horizontal axis and planned total spending or aggregate expenditure(AD) on the vertical axis.

The Keynesian cross diagram is a formulation of the central ideas in Keynes' General Theory.

From the attached diagram,

the upward sloping blue line represents the aggregate expenditure for goods and services by all households and firms as a function of their income.

The 45-degree line represents an aggregate supply curve which embodies the idea that, as long as the economy is operating at less than full employment, anything demanded will be supplied.

Aggregate expenditure and aggregate income are measured by dividing the money value of all goods produced in the economy in a given year by a price index. The resulting construct is referred to as Real Gross Domestic Product.

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