A level of GDP cannot be at equilibrium when aggregate demand exceeds output because firms will notice that
A. inventory stocks are building up.
B. inventory stocks are being depleted.
C. their profits are negative.
D. many of their workers have little to do.
Answer: B
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"When the price level increases, aggregate planned expenditure increases and equilibrium expenditure increases." Is the preceding statement correct or incorrect? Briefly explain your answer
What will be an ideal response?
If net taxes fall by $80 billion, we would expect
A) the government deficit to fall by $80 billion. B) household saving to rise by $80 billion. C) household saving to fall by more than $80 billion. D) household saving to rise by less than $80 billion.
During the financial crisis of 2007-2009, the Fed's quantitative easing program raised fears of inflation among investors, and to combat this fear, the Fed announced it would withdraw the monetary stimulus as the economy recovered
What happened to inflationary expectations during the latter part of the 2007-2009 recession? A) Inflationary expectations decreased based on the Fed's promise to withdraw stimulus money from the economy. B) Inflationary expectations increased to record high levels despite the Fed's promise to withdraw stimulus money from the economy. C) Inflationary expectations did increase, but the increase only returned expected inflation to its pre-recession level. D) Inflationary expectations decreased to the point where the Fed became worried about the economy becoming deflationary.
When was the closest the United States has ever gotten to hyperinflation?
a. During the Great Depression b. During the Great Recession c. During the Civil War d. During World War II