The role of inventories in keeping actual expenditures equal to real GDP

Question

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Answer 1

Question

Chapter 10, Problem 1E

To determine

The role of inventories in keeping actual expenditures equal to real GDP

Expert Solution & Answer

Explanation of Solution

There are two situations in when the aggregate expenditures is equal to real GDP. These are

When aggregate expenditure goes above the real GDP
When aggregate expenditure goes below the real GDP

In the situation when aggregate expenditure goes above the real GDP, more and more goods will be bought. This would in turn encourage the companies to manufacture more goods and thus results in the increase of production of more goods, which in turn will increase the real GDP.

In the situation where aggregate expenditure goes below the real GDP, the accumulation of inventories takes place as less aggregate expenditure means less purchase of goods. This reduces the production of goods by the companies, thus reducing the real GDP.

Economics Concept Introduction

Concept Introduction:

GDP or Gross Domestic Product is defined as the monetary measure of the market value of entire final goods and services which are manufactured in period of time

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Students have asked these similar questions

Why are changes in inventories included as part of investment spending? Suppose inventories declined by $1 billion during 2008. How would this affect the size of gross private domestic investment and gross domestic product in 2008? Explain.

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Answer 2

Question

Chapter 10, Problem 1E

To determine

The role of inventories in keeping actual expenditures equal to real GDP

Expert Solution & Answer

Explanation of Solution

There are two situations in when the aggregate expenditures is equal to real GDP. These are

When aggregate expenditure goes above the real GDP
When aggregate expenditure goes below the real GDP

In the situation when aggregate expenditure goes above the real GDP, more and more goods will be bought. This would in turn encourage the companies to manufacture more goods and thus results in the increase of production of more goods, which in turn will increase the real GDP.

In the situation where aggregate expenditure goes below the real GDP, the accumulation of inventories takes place as less aggregate expenditure means less purchase of goods. This reduces the production of goods by the companies, thus reducing the real GDP.

Economics Concept Introduction

Concept Introduction:

GDP or Gross Domestic Product is defined as the monetary measure of the market value of entire final goods and services which are manufactured in period of time

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Answer 3

Question

Chapter 10, Problem 1E

To determine

The role of inventories in keeping actual expenditures equal to real GDP

Expert Solution & Answer

Explanation of Solution

There are two situations in when the aggregate expenditures is equal to real GDP. These are

When aggregate expenditure goes above the real GDP
When aggregate expenditure goes below the real GDP

In the situation when aggregate expenditure goes above the real GDP, more and more goods will be bought. This would in turn encourage the companies to manufacture more goods and thus results in the increase of production of more goods, which in turn will increase the real GDP.

In the situation where aggregate expenditure goes below the real GDP, the accumulation of inventories takes place as less aggregate expenditure means less purchase of goods. This reduces the production of goods by the companies, thus reducing the real GDP.

Economics Concept Introduction

Concept Introduction:

GDP or Gross Domestic Product is defined as the monetary measure of the market value of entire final goods and services which are manufactured in period of time

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 1E

To determine

The role of inventories in keeping actual expenditures equal to real GDP

Expert Solution & Answer

Explanation of Solution

There are two situations in when the aggregate expenditures is equal to real GDP. These are

When aggregate expenditure goes above the real GDP
When aggregate expenditure goes below the real GDP

In the situation when aggregate expenditure goes above the real GDP, more and more goods will be bought. This would in turn encourage the companies to manufacture more goods and thus results in the increase of production of more goods, which in turn will increase the real GDP.

In the situation where aggregate expenditure goes below the real GDP, the accumulation of inventories takes place as less aggregate expenditure means less purchase of goods. This reduces the production of goods by the companies, thus reducing the real GDP.

Economics Concept Introduction

Concept Introduction:

GDP or Gross Domestic Product is defined as the monetary measure of the market value of entire final goods and services which are manufactured in period of time

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 1E

To determine

The role of inventories in keeping actual expenditures equal to real GDP

Expert Solution & Answer

Explanation of Solution

There are two situations in when the aggregate expenditures is equal to real GDP. These are

When aggregate expenditure goes above the real GDP
When aggregate expenditure goes below the real GDP

In the situation when aggregate expenditure goes above the real GDP, more and more goods will be bought. This would in turn encourage the companies to manufacture more goods and thus results in the increase of production of more goods, which in turn will increase the real GDP.

In the situation where aggregate expenditure goes below the real GDP, the accumulation of inventories takes place as less aggregate expenditure means less purchase of goods. This reduces the production of goods by the companies, thus reducing the real GDP.

Economics Concept Introduction

Concept Introduction:

GDP or Gross Domestic Product is defined as the monetary measure of the market value of entire final goods and services which are manufactured in period of time

Answer 6

Chapter 10, Problem 1E

To determine

The role of inventories in keeping actual expenditures equal to real GDP

Expert Solution & Answer

Explanation of Solution

There are two situations in when the aggregate expenditures is equal to real GDP. These are

When aggregate expenditure goes above the real GDP
When aggregate expenditure goes below the real GDP

In the situation when aggregate expenditure goes above the real GDP, more and more goods will be bought. This would in turn encourage the companies to manufacture more goods and thus results in the increase of production of more goods, which in turn will increase the real GDP.

In the situation where aggregate expenditure goes below the real GDP, the accumulation of inventories takes place as less aggregate expenditure means less purchase of goods. This reduces the production of goods by the companies, thus reducing the real GDP.

Economics Concept Introduction

Concept Introduction:

GDP or Gross Domestic Product is defined as the monetary measure of the market value of entire final goods and services which are manufactured in period of time

Answer 7

Chapter 10, Problem 1E

To determine

The role of inventories in keeping actual expenditures equal to real GDP

Answer 8

Expert Solution & Answer

Explanation of Solution

There are two situations in when the aggregate expenditures is equal to real GDP. These are

When aggregate expenditure goes above the real GDP
When aggregate expenditure goes below the real GDP

In the situation when aggregate expenditure goes above the real GDP, more and more goods will be bought. This would in turn encourage the companies to manufacture more goods and thus results in the increase of production of more goods, which in turn will increase the real GDP.

In the situation where aggregate expenditure goes below the real GDP, the accumulation of inventories takes place as less aggregate expenditure means less purchase of goods. This reduces the production of goods by the companies, thus reducing the real GDP.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept Introduction:

GDP or Gross Domestic Product is defined as the monetary measure of the market value of entire final goods and services which are manufactured in period of time

Answer 12

Ch. 10 - Prob. 1E Ch. 10 - Prob. 2E Ch. 10 - Prob. 3E Ch. 10 - Prob. 4E Ch. 10 - Prob. 5E Ch. 10 - Prob. 6E Ch. 10 - Prob. 7E Ch. 10 - Prob. 8E Ch. 10 - Prob. 9E Ch. 10 - Prob. 10E

The role of inventories in keeping actual expenditures equal to real GDP

The role of inventories in keeping actual expenditures equal to real GDP

Explanation of Solution

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