If an unintended increase in business inventories occurs at some level of GDP, then GDP:
A. entails a rate of aggregate expenditures in excess of the rate of aggregate production.
B. may be either above or below the equilibrium output.
C. is too low for equilibrium.
D. is too high for equilibrium.
D. is too high for equilibrium.
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Consider a tax cut which affects not only consumer disposable income, but also after-tax earnings from labor supplied to labor markets and from financial assets acquired through saving. In the long run we would expect this tax cut to
A) increase both the price level and the level of real GDP. B) decrease both the price level and increase real GDP. C) increase the price level. D) increase the level of real GDP.
Suppose a college increases the wages paid to student employees. Which of the following options is the best description of the most likely effect of the increase in wage earnings on the demand curve for school sweatshirts in the bookstore?
A) The demand curve shifts to the right. B) The demand curve shifts to the left. C) a leftward movement along the demand curve D) a rightward movement along the demand curve
A privately owned monopoly will NEVER produce along a range of output for which
A) the demand curve is elastic. B) the demand curve is inelastic. C) the price elasticity of demand is greater than 1. D) the price elasticity of supply is greater than 1.
Suppose a person can play the lottery for $1.00. His chance of winning $25 million is 1 in 50 million. If there are no other costs or benefits involved, the logic of cost/benefit analysis says:
A. he should not play the lottery. B. he should play only if he does not have a self-control problem with gambling. C. he should play the lottery. D. there is not enough information to decide whether he should play.