This table shows some information on a private closed economy. Recall that a private closed economy is one that does not have a government and does not trade with the rest of the world. Therefore, the only components of aggregate expenditure are consumption (C) and planned investment spending (I). In this problem, assume that planned investment spending is independent of the economys real GDP level. Also note that real GDP is equal to disposable income in a private closed economy.

Using the numbers provided in the table, enter the missing numbers in the empty cells. Then, using the drop-down selection menus in the right-most column, indicate whether output will tend to rise, fall, or remain in equilibrium at each level of real GDP in the table. Note that the table uses negative numbers to indicate an unplanned decrease in inventories and positive numbers to indicate an unplanned increase in inventories.

	Real GDP	Consumption	Saving	Investment	Aggregate Expenditure	Unplanned Changes in Inventories	Tendency of output (decrease, equilibrium, or increase)
1.	200	220	-20	100		-120
2.	300		20	100	380
3.	400	340		100	440
4.	500	400	100	100	500
5.		460	140	100	560	40

True or False: The most fundamental assumption behind the aggregate expenditure model is that prices in the economy are flexible.

When aggregate expenditure is less than real GDP, there is an unplanned ____increase or decrease__________ in business inventories. This unplanned change in inventories will cause the actual level of investment to be ______less or greater______ than the planned level of investment (I), which will prompt firms to _____decrease or increase_____ employment and production.