Equilibrium expenditure is the level of expenditure at which
A) firms' inventories are zero.
B) firms' inventories are at the desired level.
C) firms' produce more output than they sell.
D) aggregate planned expenditure minus planned changes in inventories equals real GDP.
E) aggregate planned expenditure plus planned changes in inventories equals real GDP.

Question

Quizplus · Accepted Answer

Equilibrium expenditure occurs when firms' inventories are at the desired level, meaning that the amount produced matches the amount sold, and there is no unplanned change in inventories.

Equilibrium Expenditure Is the Level of Expenditure at Which