Answer the following statements true (T) or false (F)
1) When there are unplanned increases in inventories, then actual investment ends up being less than planned investment.
2) If planned investment is larger than saving, then real GDP will increase as the economy adjusts towards equilibrium.
3) In a closed private economy, an unplanned decrease in inventories will cause firms to increase real GDP.
4) If the MPC in the economy is 0.7 and aggregate expenditures fall by $10 billion, then real GDP will fall by $17 billion.
5) If aggregate expenditures rise by $200 billion and real GDP consequently rises by $500 billion, then the MPC in the economy must be 0.4.
1) F
2) T
3) T
4) F
5) F
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Assume that the supply curve for a commodity shifts to the left and the demand curve shifts to the right, and the shift in demand is greater than the shift in supply
Then, in comparison to the initial equilibrium, the new equilibrium will be characterized by: A) a lower price and quantity. B) a higher price and quantity. C) a higher price and a lower quantity. D) a lower price and a higher quantity.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y2. C. P3 and Y1. D. P2 and Y3.
The Cournot theory of oligopoly assumes rivals will:
A. keep their output constant. B. follow the learning curve. C. decrease output whenever a firm increases its output. D. increase their output whenever a firm increases its output.
Refer to Exhibit 2-9. Who has the comparative advantage in the production of good A?
 ANSWER 5.png)