If an economy at the equilibrium level of GDP experiences an increase in the amount of investment spending, then inventories will be
a. depleted, causing firms to cut production.
b. accumulated, causing firms to cut production.
c. depleted, causing firms to increase production.
d. accumulated, causing firms to expand production.
b
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According to adaptive expectations theory, expansionary monetary and fiscal policies to reduce the unemployment rate are
A) useless in the short run
B) useless in the long run
C) ineffective on the price level
D) none of the above
Variable costs are:
A. costs that depend on the quantity of output produced. B. costs that don't depend on the quantity of output produced. C. one-time costs. D. None of these is true.
A company producing sports equipment wishes to increase its total revenue. Should it increase or decrease its price when the product's price elasticity of demand is equal to -0.8?
(a) Increase - the good is price inelastic and in order to increase TR the firm should increase its price. (b) Decrease - the good is price elastic and in order to increase TR the firm should decrease its price. (c) Increase - the good is price elastic and in order to increase TR the firm should increase its price. (d) Decrease - the good is price inelastic and in order to increase TR the firm should decrease its price.
Answer the following questions true (T) or false (F)
1. A complete circular flow of the economy includes both the government sector and the financial markets. 2. Net exports of goods and services is equal to imports minus exports. 3. If personal income is equal to $3,000 and consumers spend $3,600, the level of savings in the economy would $600.