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Unformatted text preview: iii. Even if national income were zero, planned expenditure would remain postive B) Actual Expenditure = Planned Expenditure That is what is produced must be purchased. (figure 2) That is what is produced must be purchased. If not , firms experience unplanned changes in inventories and this induces them to change production levels. Changes in production influence total income and expenditure, moving the economy toward equilibrium. (figure 3) C) This model shows aggregate demand at each level of price; the aggregate demand curve shows aggregate demand at each level of price when the level of income has been adjusted to it (short-run) equilibrium level. Intro Macro Supplementary Handout D) Shifts in Planned Expenditure...
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- Summer '09