At the equilibrium level of aggregate expenditure, what does aggregate expenditure equal? What happens at other levels of real GDP to bring about an equilibrium?
What will be an ideal response?
At the equilibrium level of aggregate expenditure, aggregate expenditure is equal to real GDP. At levels of real GDP where aggregate expenditure is greater than real GDP, business inventories are less than their target levels. In this situation, businesses increase their production, so output increases and real GDP increases. At levels of real GDP where aggregate expenditure is less than real GDP, business inventories are greater than their target levels. In this situation, businesses decrease their production, so output decreases and real GDP decreases.
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Compared to private bargaining, using eminent domain to acquire land generally
A) keeps negotiation costs low. B) is more time consuming and less successful. C) reduces cooperative surplus. D) is frowned upon by the government.
Which of the following is evidence of a surplus of bananas?
A) The price of bananas is lowered in order to increase sales. B) Firms raise the price of bananas. C) The equilibrium price of bananas rises due to an increase in demand. D) The quantity of bananas demanded is greater than the quantity supplied.