Question
Assume the economy starts at equilibrium. As the coronavirus outbreak spreads, firms announce massive layoffs of employees. As a result, the AE line will Group
Assume the economy starts at equilibrium. As the coronavirus outbreak spreads, firms announce massive layoffs of employees. As a result, the AE line will Group of answer choices None of these answers is correctÂ
- shift down and inventories will rise
- shift up and inventories will fall
- shift up and inventories will rise
- shift down and inventories will fall
Step by Step Solution
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The detailed answer for the above question is provided below In an economy the Aggregate Expenditures AE line represents the total spending in the economy at different levels of income Its a crucial concept in economics that helps understand the relationship between total output produced GDP and total income received When experiencing massive layoffs as in the context of the coronavirus impact aggregate demand tends to decrease because a higher number of people are unemployed and therefore have less money to spend With less demand from consumers businesses will make fewer sales and spend less on capital and inventory leading to lower aggregate expenditure ...
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Principles Of Macroeconomics
Authors: Karl E. Case,Ray C. Fair , Sharon E. Oster
13th Global Edition
1292303824, 978-1292303826
