If total spending is less than the value of total output, firms
A. may decide to cut prices.
B. may increase production levels.
C. will tend to raise prices.
D. will notice inventories falling.
Answer: A
You might also like to view...
Assume a closed economy. If consumption spending is $6.2 trillion, investment spending is $2.5 trillion, net taxes are $1.5 trillion and total income is $11 trillion, how much must government purchases be?
a. $2.3 trillion b. $0.8 trillion c. $3.3 trillion d. $7 trillion e. cannot be determined without more information
If the demand for softballs increases, one could expect the demand for leather to increase. This is attributable to the
A. opportunity cost of producing softballs. B. marginal productivity principle. C. reduction in the cost of production of softballs. D. derived demand for an input.
If = 4%, = 3%, and = 2%, then must equal:
What will be an ideal response?
Refer to Figure 16.4. If the economy is initially in equilibrium at P3 and Q1, the appropriate policy to move the economy to an equilibrium at P1 and Q2 would be to
A. Increase government regulation. B. Increase the marginal tax rate. C. Increase the minimum wage rate. D. Increase the investment in human capital.