-The above figure shows the AE curve and 45° line for an economy.
a) If real GDP equals $8 trillion, how do firms' inventories compare to their planned inventories?
b) If real GDP equals $16 trillion, how do firms' inventories compare to their planned inventories?
c) What is the equilibrium level of expenditure? Why is this amount the equilibrium?
Definitions:
Strategic Alliance
A formal agreement between two or more parties to pursue a set of agreed-upon objectives while remaining independent organizations.
Vertical Integration
A strategy where a company expands its operations by taking over or merging with other companies that are at different stages of production or distribution in the same industry.
Merger
The combination of two or more companies into one, with the goal of increasing market share or efficiency.
Acquisition
The purchase of one organization by another.
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