If spending as given by the expenditure line is greater than output, then spending is too high, and the expenditure line will shift down until equilibrium is achieved.

Question

Quizplus · Accepted Answer

The expenditure line being above output indicates an economy where demand exceeds supply, but this does not automatically lead to the expenditure line shifting down. Instead, it could lead to an increase in output to meet the higher demand, moving towards equilibrium without necessarily reducing spending.

If Spending as Given by the Expenditure Line Is Greater