Assume an economy is in equilibrium at an output level of $600 billion. If government purchases decrease by $75 billion, then at the output level of $600 billion, there is
A. either an unplanned increase or decrease in inventories depending on the value of the MPC.
B. an unplanned increase in inventories.
C. an unplanned decrease in inventories.
D. an unplanned inventory change of zero.
Answer: B
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Consider two countries—A and B. Economy A is a command economy, while economy B is a market economy. Given this information, which of the following statements is likely to be true?
A) Both economies are likely to grow at the same rate. B) Both economies are likely to stagnate without any increase in GDP. C) Institutions in economy A are likely to be more inclusive than institutions in economy B. D) Institutions in economy B are likely to be more inclusive than institutions in economy A.
Higher interest rates
A) reduce total planned real expenditures because they increase the cost of borrowing funds. B) reduce total planned real expenditures because they reduce the income of bankers and other creditors. C) increase total planned real expenditures because they increase the incomes of all people in the economy. D) increase total planned real expenditures because they lower the costs of building new plants and equipment.
Cartels are organizations that:
A. coordinate the output and pricing decisions of a group of firms. B. keep markets contestable. C. encourage price wars. D. use predatory pricing to monopolize industries.
Refer to the above figure. Which of the following points indicates an efficient use of resources?
A. a B. d C. e D. More information is needed to answer the question.