If real GDP and aggregate expenditure are less than equilibrium expenditure, what happens to firms' inventories? How do firms change their production? And what happens to real GDP?
What will be an ideal response?
If real GDP and aggregate expenditure are less than their equilibrium levels, an unplanned decrease in inventories occurs. The unplanned decrease in inventories leads firms to increase production to restore inventories to their planned levels. The increase in production increases real GDP.
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People who are unemployed because of job search are best classified as
a. cyclically unemployed. b. structurally unemployed. c. frictionally unemployed. d. discouraged workers.
The price of an airline ticket from Denver to Chicago costs $450. A bus ticket costs $150. Traveling by plane takes 2 hours compared with 32 hours by bus. Other things constant, Erica would gain by choosing air travel if, and only if, she values her time at more than
a. $5 per hour. b. $9.38 per hour. c. $10 per hour. d. $300 per hour.