Based on Aggregate Expenditure (AE) model if aggregate expenditure isless than GDP, what will happen (increase or decrease) to: inventoriesGDPEmployment 6.Based on Aggregate Expenditure (AE) model if aggregate expenditure isless than GDP, what will happen (increase or decrease) to:A. inventoriesB. GDPC. Employment

Aggregate expenditures are the amount spent in the economy which forms through the planned…

Answered: Based on Aggregate Expenditure (AE)…

Based on Aggregate Expenditure (AE) model if aggregate expenditure is less than GDP, what will happen (increase or decrease) to: inventories GDP Employment

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Based on Aggregate Expenditure (AE) model if aggregate expenditure is

less than GDP, what will happen (increase or decrease) to:

inventories
GDP
Employment

Definition Video Definition Overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period. Video

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Through the first half of 2023, total new-vehicle sales in the U.S. were up more than 12%. This sales number included medium- and heavy-duty trucks, which are more often purchased by businesses than households. Which component of GDP is affected by purchases of new vehicles by businesses? Which component of GDP is affected by purchases of new vehicles by households? Explain.
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The income and expenditure approaches to measuring a nation's GDP can be combined using the circular flow model. Categorize each of the following flows as part of either aggregate demand or national income. Consumption (C) Investment (1) Government purchases (G) Net exports (X-IM) Net taxes (NT) Disposable income (DI) While national income and domestic product must be equal, income must also equal expenditure for each of the six sectors in the circular flow diagram: firms, consumers, governments, financial system, investors, and the "rest of the world." For example, the amount of flowing into the financial system sector must equal the amount of flowing out of this sector. Saving (S) Net taxes (NT) Aggregate Demand Categorize each of the following flows as either injections into the circular flow or leakages from the circular flow. Exports (X) Investment (1) Government purchases (G) Imports (IM) National Income Injections Leakages O Save & Continue
Gross Domestic Product (GDP) gross domestic product = consumption + investment + government purchases + net exports GDP = C + I + G + (X − M), calculate GDP using the expenditure approach. Inventory investment $50 billion Fixed investment $120 billion Consumer durables $420 billion Consumer nondurables $275 billion Interest $140 billion Indirect business taxes $45 billion Government wages and salaries $300 billion Government purchases of goods and services $110 billion Imports $80 billion Exports $40 billion Profits $320 billion Services $600 billion
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Write out and explain the GDP and Aggregate Expenditure identity equations.