Chapter 27 Review
If realGDPand aggregate expenditure are less than equilibrium expenditure, an unplanned de-crease in inventories occurs. Firms increase production to restore inventories to their planned levels.The increase in production increases realGDP.7) If real GDP and aggregate expenditure are greater than equilibrium expenditure,what happens to firms’ inventories? How do firms change their production? And whathappens to real GDP?If realGDPand aggregate expenditure are greater than equilibrium expenditure, an unplannedincrease in inventories occurs. Firms decrease production to restore inventories to their planned levels.The decrease in production decreases realGDP.5
8) What is the multiplier? What does it determine? Why does it matt
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