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Keynesian cross model

Please help to the following questions. Thank you for your assistance.

Suppose that inventory growth in the U.S. is unexpectedly high this year. What is likely to happen to output next year, and why? Is the economy currently in equilibrium? Use the Keynesian cross model to explain your answers.

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Solution:

Embedded in the investment component I there are both intended investment i, that is, investment which is part of producers plans and unintended investment that is unforeseen changes in inventories, Δinv, that come about because of unexpected changes in the level of consumption demand or in general final ...

Solution Summary

Keynesian cross model is utilized.

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