In an economy where total expenditures equal C+I+G+(X-IM):

if the equilibrium occurs below full employment, then the economy is suffering from inflation.

if the equilibrium occurs above full employment, then the rate of unemployment is being drawn down below 6%.

if the level expenditures equals the level of income, the economy is not at the most desired level of income.

if the level of expenditures at full employment is lower than Yf, then the economy moves into an inflationary gap.

In the income-expenditure model:

if TE>Y, then Y decreases.

if TE=Y, then Y does not change.

if TE

if TE does not equal Y, then Y cannot increase or decrease.

In Figure 8.1, all of the following are true, except: TE=C+I95+(X-IM) if the economy is to the left of the equilibrium, income will increase. if the economy is to the right of the equilibrium, income will decrease. to the left of the equilibrium income exceeds expenditures. to the right of the equilibrium expenditures are less than income. Figure 8.2 TE=C+I+6+(X-IM) In Figure 8.2, all of the following is true, except: at lll employment there is a disequilibrium. at lll employment there is a lack of total demand for goods and services. at full employment more is purchased than the output of a fully employed economy. at lll employment the total expenditure function is below the 45? line