Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please EXPLAIN why have you chose that one. Thank You! True or false and explain why: a} b} a) When aggregate expenditure is greater than

Please EXPLAIN why have you chose that one. Thank You!

image text in transcribed
True or false and explain why: a} b} a) When aggregate expenditure is greater than aggregate output. there will be an unplanned build-up of inventories. If actual investment is greater than planned investment, unplanned inventories decline. If planned invesunent increases. equilibrium will be restored only when saving has increased by exactly the amount of the initial increase in planned investment, assuming there is no government or foreign sector. When a closed economy without a government is in equilibrium, planned saving equals planned investment. If aggregate expenditure decreases. then equilibrium output increases. Assuming there is no government or foreign sector, the economy will be in equilibrium if, and only if, planned investment equals actual investment. Actual investment equals planned investment plus unplanned changes in inventories. If the MPG is 0.?5, then the multiplier is 4. The larger the MPG, the smaller the multiplier. The paradox of thrift is that all people deciding to save more could lead to them saving less

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

10th edition

0-07-794127-6, 978-0-07-79412, 978-0077431808

More Books

Students also viewed these Economics questions

Question

CS 2 3 0 Project One GameServices Java

Answered: 1 week ago