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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

What happens in the economy if total production (TP) is greater than total expenditures (TE)?

To determine

The economy when the total Production is higher than the total Expenditure.

Explanation

Production is the process of making the output units that are consumable in the economy by the consumers. The firms are the producers who make the products and the total production of the economy refers to the aggregation of all the individual production of the firms in the economy. Similarly, the total expenditure of the economy refers to the aggregation of all the expenditures of the consumers in the economy.

When the total production is higher than the total expenditure, it means that the production in the economy is greater than the demand of the economy. As a result, there will be excess supply of goods and services in the economy than the required. This increases the supply stock of the economy which turns out to be the inventory for the firms that produces these goods...

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