How does the goods market return to equilibrium if AE is less than production?
What will be an ideal response?
With spending less than production, there is an unexpected increase in inventories. Rising inventories cause firms to cut production, and the economy will move down the AE line until it reaches equilibrium.
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A) monetary policy has no effect on income. B) fiscal policy has no effect on income. C) monetary policy has no effect on interest rates. D) fiscal policy has no effect on interest rates.
New scientific knowledge mainly comes from university and government laboratories, not private firms, because:
A. large corporations do not have funds available to channel toward basic research. B. government pays scientists higher salaries than do private firms. C. entrepreneurs find it difficult to secure venture capital to finance innovation. D. basic scientific principles, as such, cannot be patented and do not always have commercial