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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

If Real GDP is $10.4 trillion in Exhibit 13, what is the state of business inventories?

To determine

The state of economy according to the TE-TP model of economy.

Explanation

The expenditures are of three types in the closed economy and they are the consumption expenditure, investment expenditure, and the government purchases. These three expenditures in the economy are the expenditures that constitute the total expenditure of the economy. Thus, the total expenditure is the vertical summation of these three different expenditures of the economy.

The production can take place in three different sectors such as the households, firms, and the government sectors. Thus, similar to the total expenditure, the total product is the vertical summation of the individual productions of the three different sectors of production in the economy. The present situation is that the real GDP is $10...

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