Real aggregate
expenditure, AE

Real GDP, Y

AE

Y=AE

Real GDP

Macroeconomic Equilibrium 1

1. Macroeconomic equilibrium occurs 
where the AE line crosses the 45° line. 
If real GDP is less than the equilibrium 
amount, planned aggregate expenditure
is greater than total production, firms 
will experience an unplanned decrease 
in inventories, . . .

2. . . . results in increasing production
and increasing GDP.

u = Vector((0, 0), (14, 0))
v = Vector((0, 0), (0, 12))
f(x) = If[0 ≤ x ≤ 12, x]
h(x) = If[0 ≤ x ≤ 12, ((-((-0.5))) * x) + 4]
GDP = -0.15 (slider from -3 to 0, step 0.01)
b = Ray((GDP + 8, 0), v)
A = Intersect(h, b, (7.849999999999999, 7.924999999999999))
B = Intersect(f, b, (7.849999999999999, 7.849999999999999))
c = Segment(A, B)
C = Point(b)
d = Segment(B, C)
D = Intersect(f, h, (8, 8))
E: (x(D), 0)
a = Segment(D, E)
N_1: (x(A), 1)
N_2 = (8, 1)
w = Vector(N_1, N_2)