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Author Question: At the equilibrium level of aggregate expenditure, what does aggregate expenditure equal? What ... (Read 182 times)

cabate

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on: Jun 29, 2018
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?

Question 2

If the disposable income decreases, then
 
  A) the demand for loanable funds increases.
  B) the quantity of loanable funds demanded increases.
  C) the supply of loanable funds increases.
  D) the quantity of loanable funds supplied decreases.
  E) the supply of loanable funds decreases.


ciecieme

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

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.

Answer to Question 2

E


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