After you have studied Reading Between the Lines on pp. 690–691 answer the following questions.

a. If the 2010 changes in inventories were mainly planned changes, what role did they play in shifting the AE curve and changing equilibrium expenditure? Use a two-part figure (similar to that on p. 678) to answer this question.

b. Could the news article report that some of the rise in inventories in 2010 was unplanned be consistent with the AE model? Draw an appropriate graph to illustrate your answer.

c. What do you think will happen to unplanned inventory changes when real GDP returns to potential GDP?