Consider the above figure. At a price level of 120
A. total planned real expenditures exceed total planned production.
B. total planned production exceeds total planned expenditures.
C. inventories would begin to accumulate.
D. prices would fall.
Answer: A
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The gap between potential GDP and real GDP had been as large as 7 percent during the worst of the 2007-2009 recession. By 2015, the gap
A) was positive, with real GDP exceeding potential GDP. B) had been eliminated. C) was still nearly 3 percent. D) remained at 7 percent.
In the specific factors model, a country's production possibility frontier is ________ because of ________
A) a straight line; diminishing marginal returns B) a curved line; diminishing marginal returns C) a straight line; constant marginal returns D) a curved line; constant marginal returns E) a curved line; a limited supply of labor
If the money supply in the economy were at MS3, to engage in expansionary policy the Federal Reserve Bank would use open market operation to move money supply to:
A. MS1
B. MS2
C. MS4
D. it would stay at MS3
In the circular-flow diagram,
a. profit flows from households to firms. b. labor flows from households to firms. c. services flow from households to firms. d. All of the above are correct.