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Author Question: Trade-offs force society to make choices when answering what three fundamental questions? What ... (Read 118 times)

Pineappleeh

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on: Jun 29, 2018
Trade-offs force society to make choices when answering what three fundamental questions?
 
  What will be an ideal response?

Question 2

If real GDP and aggregate expenditure are greater than equilibrium expenditure, what happens to firms' inventories? How do firms change their production? And what happens to real GDP?
 
  What will be an ideal response?


karmakat49

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Reply #1 on: Jun 29, 2018
Answer to Question 1

1. What goods and services will be produced?
2. How will the goods and services be produced?
3. Who will receive the goods and services produced?

Answer to Question 2

If real GDP and aggregate expenditure are greater than their equilibrium levels, an unplanned increase in inventories occurs. The unplanned increase in inventories leads firms to decrease production to restore inventories to their planned levels. The decrease in production decreases real GDP.


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