I. Disequilibrium occurs when planned aggregate expenditure is greater than aggr II. Disequilibrium occurs when planned aggregate expenditure is less than aggrega III. When planned aggregate expenditure is exceeded by aggregate income, produ so as to adjust output downward until equilibrium is reached IV. When planned aggregate expenditure exceeds aggregate income, production is to adjust output upward until equilibrium is reached

I. Disequilibrium occurs when planned aggregate expenditure is greater than aggr II. Disequilibrium occurs when planned aggregate expenditure is less than aggrega III. When planned aggregate expenditure is exceeded by aggregate income, produ so as to adjust output downward until equilibrium is reached IV. When planned aggregate expenditure exceeds aggregate income, production is to adjust output upward until equilibrium is reached

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Figure 3 45° line 20 16 12 1.2 4 Disposable income (trillions of 2005 dollars) 8 12 16 20 24 Refer to Figure 3. The marginal propensity to consume equals * 0.80 0.90 0.75 0.85 Consumpfion expenditure (trillions of 20050 dollars}
If the aggregate expenditure line shifts in response to a decrease in real wealth, describe the process of moving back to equilibrium.
If the aggregate expenditure line shifts in response to an increase in real wealth, describe the process of moving back to equilibrium.
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