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Impact of inventory increases on the business cycle

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Reference no: EM131476176

Explain whether you agree with the following statement: ‘The impact of inventory increases on the business cycle depends upon whether they are planned or unplanned.'

Next, explain how the adjustment to macroeconomic equilibrium occurs when spending is less than production.

Is it possible for the economy to be in macroeconomic equilibrium at a level of real GDP that is greater than the potential level of GDP? Illustrate using a 45° line diagram.

Reference no: EM131476176

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