Answer Happy

The graph models an economy in equilibrium with a real GDP of $180 billion. Suppose that consumers' expectations about future incomes change, causing unplanned inventory investment to increase by $30 billion. Shift the planned aggregate expenditure (AE) line to show the effect of this change. 300 270 45° line 240 210 180 Planned aggregate spending (billions of dollars) 150 120 Planned AE 90 60 30 0 0 30 240 270 300 60 90 120 150 180 210 Real GDP (billions of dollars) This change will cause the equilibrium level of real GDP to
This change will cause the equilibrium level of real GDP to decrease. remain unchanged. increase. By how much will GDP change once the new equilibrium is reached? If GDP will decrease, be sure to include a negative sign. GDP change: $ billion