Chapter 11

Chapter 11 - Chapter 11: Income and Expenditures Equilibrium

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Chapter 11: Income and Expenditures Equilibrium     The equilibrium level of real GDP, or equilibrium output, is the output level in  which planned expenditures equal real GDP. This being the case, firms do not  experience unplanned changes to their inventories.  To find the equilibrium level of real GDP, refer to the display area to the right of  your graph under the Calculator heading. Note what happens to the values for  unplanned inventory depletion and accumulation as you drag the Output line to  alternative output rates. Locate the rate of output associated with zero inventory  accumulation and zero inventory depletion. This rate of output is the equilibrium  level.      Aggregate expenditures (AE) equal real GDP (Y) at $600 million, the  intersection of the AE function and the 45-degree line. Below the equilibrium level  of real GDP, AE exceeds real GDP. Businesses sell more than they currently 
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Chapter 11 - Chapter 11: Income and Expenditures Equilibrium

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