When total expenditure (TE)exceeds total production (TP),inventory levels rise unexpectedly,which sends a signal to firms that they have overproduced,so they cut back on production.

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When inventory levels rise unexpectedly due to TE exceeding TP, firms understand that they have produced more than the market demands, and they cut back on production. This helps to rebalance supply and demand levels.

When Total Expenditure (TE)exceeds Total Production (TP),inventory Levels Rise Unexpectedly,which