Draw a graph showing a 45 line and an aggregate expenditure line. a. Choose a point where
Question:
Draw a graph showing a 45° line and an aggregate expenditure line.
a. Choose a point where real GDP is less than aggregate expenditure and label it GDPA. Explain what will happen to inventories if the economy is operating at this point. What signal does this send to firms? Is GDPA sustainable?
b. Choose a point where real GDP is greater than aggregate expenditure and label it GDPB. Explain what will happen to inventories if the economy is operating at this point. What signal does this send to firms? Is GDPB sustainable?
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a Inventories will fall unexpectedly sending firms a signal to produce more output GDP A i...View the full answer
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Related Book For 
Macroeconomics Principles and Applications
ISBN: 978-1111822354
6th edition
Authors: Robert E. Hall, Marc Lieberman
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