Answer to Question #274214 in Macroeconomics for Faza andika

Question

Define carefully what is meant by equilibrium in the multiplier model. For each of the following, state why the situation is not an equilibrium. Also describe how the economy would react to each of the situations to restore equilibrium.

a) In Table 22-2, GDP is $3300 billion

b) In Figure 22-7, actual investment is zero and output is at M.

c) Car dealers find that their inventories of new cars are rising unexpectedly

Answer 1

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