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.
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Genovia produced 10 million tonnes of wheat in a particular year. However, 1 million tonnes got infested with pests and had to be thrown away. How will this affect the calculation of the gross domestic product of the country for that year?
What will be an ideal response?
In the typical leisure/consumption model, an increase in the wage is equivalent to a decrease in the price of the composite consumption good.
Answer the following statement true (T) or false (F)
List four characteristics of monopolistic competition
What will be an ideal response?
Power plants with the lowest operating costs tend to:
A. have the lowest fixed costs in terms of construction. B. have the highest fixed costs in terms of construction. C. operate on the smallest scale of energy production. D. generate the cleanest energy.