24 August 2006

Macroecons concept illustrated - AE graph-

Where are the chocolates and sweets?

i believe there was a great demand for chocolates where the total demand for goods in this case being chocolate is more than what is currently produced.

Thus shortage arises

With this being the case firms have to draw upoun their inventory to to satisfy excess demand. Which leads to unplanned inventory reduction

Firm thus expand production in the next period.

|| Rafale || || Strikeagle || ||
8/24/2006 02:12:00 AM

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