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The graph shows a simple two - sector economy whose current output level is Y 1 . Which of the statements below correctly describes how
The graph shows a simple twosector economy whose current output level is Which of the statements below correctly describes how the economy moves toward the equilibrium income
A Since aggregate expenditures at are greater than real GDP investment will decrease and real output will fall.
B Since aggregate expenditures are less than real GDP at output will fall.
C At firms will experience unexpected increases in inventories and will increase production until the economy reaches equilibrium.
D At firms will experience unexpected increases in inventories and will reduce production until equilibrium GDP has been attained.
E At firms will experience an unexpected decrease in inventories. In response, they will increase production, and therefore output will rise.
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