Suppose the economy is initially at equilibrium, in which total planned real expenditures equals real GDP. Which of the following will occur if there is an increase in autonomous investment?
A) Inventories will decrease immediately and production of goods and services will increase until real GDP catches up with total planned real expenditures.
B) Inventories will increase immediately and production of goods and services will decrease until real GDP catches up with total planned real expenditures.
C) Inventories will not change and production of goods and services will not change either.
D) Both inventories and production of goods and services will increase.
A
You might also like to view...
If government forced a firm to charge a price equal to marginal cost in a situation where there are scale economies,
a. new firms would enter the industry. b. the firm would be forced to go bankrupt. c. positive economic profit would grow even larger. d. marginal cost would exceed average cost.
As a result of the Uruguay Round, production of ________ goods increased in Asian developing countries and polluting emissions in these countries ________ as a result.
A. unskilled-labor-intensive; decreased B. capital and skill-intensive; increased C. capital and skill-intensive; decreased D. unskilled-labor-intensive; increased
A main trading partner with the U.S. is:
A. Hungary. B. Canada. C. Russia. D. Italy.
Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price and buys up any surplus?
A. taxpayers, who no longer must provide funds to purchase surplus units of the product once the price support program is in place B. producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues C. the government, which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program D. consumers, who purchase more units of the product than they did before the price support program was implemented