When equilibrium GDP is at full-employment GDP and autonomous consumption declines, firms are induced _____

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05-07-2022
Business

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When equilibrium GDP is at full-employment GDP and autonomous consumption declines, firms are induced _____

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Tripatsingh039idn Tripatsingh039idn · Answer 1 · 2022-07-13T04:15:33-04:00

When equilibrium GDP is at full-employment GDP and autonomous consumption declines, firms are induced to reduce production output thus moving the level of GDP downward.

What is equilibrium GDP?

Gross domestic product (GDP) is a crucial economic metric for assessing a country's overall financial situation. It is determined by summing up the entire monetary value of all the goods and services produced in a nation over the course of a year.

Equilibrium GDP is the level of GDP at which total demand and total supply are balanced.

An economy is in a recession if its real GDP at the moment is lower than the output at full employment. An economy is in a boom if its real GDP at the moment is higher than its output at full employment. We say the economy is in long-run equilibrium if the current output is equivalent to the output at full employment. The output is not excessively high or low. It fits perfectly.

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What is equilibrium GDP?

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