If actual real GDP is greater than the equilibrium level of real GDP (i.e., the aggregate expenditure function is below the 45-degree line), how is equilibrium restored?
At the current level of real GDP, planned spending (C + I) is less than production. The amount of goods
and services produced is greater than the amount people intend to buy. Inventories rise above the levels
firms desire to hold. These unintended inventory increases are a signal to firms to reduce production.
Production will continue to fall until desired inventory levels are restored or when the amount firms
produce just equals aggregate expenditure.
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Aggregate demand refers to the relationship between
A) the price level and the quantity of real GDP supplied. B) prices and the quantity of a good supplied. C) the price level and the quantity of real GDP demanded. D) prices and the quantity of a good demanded.
Structural unemployment results when the number of jobs is insufficient for the number of workers
a. True b. False Indicate whether the statement is true or false