Relationship To Macroeconomic Equilibrium
In macroeconomics, equilibrium in the goods market occurs when the supply of goods (output) equals the demand for goods (the sum of various types of expenditure—consumer expenditure, government expenditure on goods, net expenditures by people outside the country on the country's exports, fixed investment expenditure on physical capital, and intended inventory investment). If these are indeed equal for a particular time period, there is no unintended inventory investment and there is goods market equilibrium. If they are not equal there is disequilibrium in the goods market, reflected in the presence of positive or negative unintended inventory investment.
Read more about this topic: Inventory Investment
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