Week 12: Macro Equillibrium Part 2

Question 1

What is macroeconomic equilibrium?

Answer 1

the total goods and services produced by the market is equal to the total goods and services demanded.

Question 2

Inventories

Answer 2

stocks of goods held to satisfy future sales.

Question 3

Inventory investment

Answer 3

the value of the change in total inventories held in the economy during a given period.

Question 4

Unplanned inventory investment

Answer 4

when spending is more or less than businesses expected, leading to unplanned changes in inventories.

Question 5

Actual investment spending

Answer 5

the sum of planned investment spending and unplanned inventory investment.

Question 6

What is macroeconomic equilibrium output?

Answer 6

Real GDP = AE planned

Question 7

What is the multiplier?

Answer 7

how much GDP changes as a result of both the direct and indirect effects flowing from each extra dollar of spending.

Question 8

what is the equation for finding changes in GDP?

Answer 8

ΔGDP = ΔSpending × Multiplier

Question 9

What is the equation for finding the multiplier?

Answer 9

1 / (1 - MPC)