-The Above Figure Shows the AE Curve and 45° Line

question 477

Essay

-The above figure shows the AE curve and 45° line for an economy.
a) If real GDP equals $6 trillion, how do firms' inventories compare to their planned inventories?
b) If real GDP equals $12 trillion, how do firms' inventories compare to their planned inventories?
c) What is the equilibrium level of expenditure? Why is this amount the equilibrium?

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Definitions:

Inattentional Blindness

A psychological phenomenon where an individual fails to perceive an unexpected stimulus in plain sight due to focusing attention on other tasks or objects.

Colour Vision

Colour vision is the capability of the visual system to distinguish and interpret different wavelengths of light as distinct colours.

Pitch Perception

The auditory sensation that allows individuals to identify the frequency or musical note of a sound.

Theoretical Diversity

The presence of multiple theories or viewpoints within a field of study, highlighting the complexity and multifaceted nature of the subject matter.