How does equilibrium expenditure come about? What adjusts to achieve equilibrium?

What will be an ideal response?

Equilibrium expenditure results from adjustments in real GDP. For instance, if aggregate planned expenditure exceeds real GDP, firms find that their inventories are below their targets. In response, firms increase production to meet their inventory targets, As production increases, real GDP increases. The increase in real GDP increases aggregate planned expenditure but by less than the increase in real GDP. Eventually real GDP increases sufficiently so that it equals aggregate planned expenditure and, at that point, equilibrium expenditure occurs.