00:01
Here we're looking at the relationship between aggregate expenditure and gdp with an example that's telling us that business inventories increased by $62 billion in a quarter.
00:11
So we're looking at the short -term effect right here.
00:14
You can see i've noted that for us.
00:16
When we'd like to know, given the information that these inventories have increased, is aggregate expenditure higher or lower than gdp? and an important rule of thumb to remember and what will essentially give us the answer here is that when inventories rise, they rise as a result of aggregate expenditure being less than gdp.
00:37
So ae, this is going to be our aggregate expenditure, could be concluded to be less than gdp.
00:46
And as a result of that, that's where we're seeing these increase in inventories.
00:51
And when we also see as an increase of these inventories and aggregate expenditure being less than gdp, is that gdp and employment are going to decrease as a result here.
01:13
So this is really just a general rule that we can see...