When firms plan to restock their inventories, equilibrium expenditure_______ and real GDP_______.

Question

Quizplus · Accepted Answer

When firms plan to restock their inventories, they will increase their purchases of goods and services, which will lead to an increase in equilibrium expenditure. This increase in expenditure will lead to an increase in production, resulting in an increase in real GDP. Therefore, both equilibrium expenditure and real GDP will increase.

When Firms Plan to Restock Their Inventories, Equilibrium Expenditure_______ and Real