Goods Market Equilibrium Condition (Output = Aggregate Demand)

Graphical Determination of Equilibrium Output

Inverse Relationship Between Equilibrium Output and Unemployment

Role of Unintended Inventory Changes in Reaching Goods Market Equilibrium

Comparison of National Accounts Identity and Goods Market Equilibrium

Zero Inventory Investment as a Condition for Goods Market Equilibrium

Calculating Equilibrium Output Algebraically

Assumption of Perfectly Elastic Aggregate Supply in Demand-Side Models

A national retail chain observes that over the past quarter, its warehouses have accumulated a significant amount of unsold merchandise, far more than their forecasts predicted. Based on this information alone, what is the most likely state of the broader goods market and what is the expected response from producers?

An economy is described by the following: aggregate output is currently $500 billion, while planned aggregate demand (the total amount households, firms, and the government plan to spend) is$550 billion. Based on this information, which of the following accurately describes the state of the goods market and the immediate consequence?

If an economy's goods market is in equilibrium, which of the following conditions is necessarily true?

Evaluating an Economic Statement on Market Equilibrium

An economist makes two statements about a simple economy:

Statement 1: "The total value of goods produced in any period is, by definition, equal to the total value of goods sold to final users plus any goods that were produced but not sold."

Statement 2: "The economy is in a state of balance only when the total value of goods produced is exactly equal to the total amount of goods that all agents in the economy planned to purchase."

Which of the following best analyzes the relationship between these two statements?

An economy is initially in a state where the total supply of goods equals the total demand. Suddenly, there is an unexpected and widespread decrease in consumer desire to purchase goods. Arrange the following events in the logical sequence that describes how the market adjusts to a new, lower level of equilibrium output.

Calculating Goods Market Equilibrium

Match each state of the goods market, described by the relationship between total output and total planned spending, with its corresponding effect on firm inventories.

True or False: The fact that total production in an economy is always equal to total sales plus changes in inventory (an accounting identity) means that the goods market is always in equilibrium.

Consider a graphical model where the vertical axis represents total planned spending and the horizontal axis represents total income or output. A 45-degree line shows all points where total spending equals total output. An upward-sloping 'planned spending' line shows the total amount that households, firms, and the government intend to buy at each level of income. The economy is currently operating at a level of output where firms are producing more goods than are being purchased. Which of the following descriptions accurately locates this economy's position on the graph?