"If aggregate planned expenditure exceeds real GDP, then aggregate expenditure and real GDP will increase." Explain whether the previous sentence is correct or incorrect
What will be an ideal response?
The sentence is correct. If aggregate planned expenditure exceeds real GDP, then firms find that their inventories are being decreased more than planned. As a result, firms increase production in order to restore their inventories back to their planned levels. When firms increase their production of goods and services, real GDP increases.
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Those who favor government policies to stimulate the economy by creating incentives for individuals and businesses to increase their productive efforts are supporting:
a. supply-side economics. b. Keynesian economics. c. monetarist economics. d. Marxian economics.
As people have more time to adjust to a price change,
a. demand becomes more elastic, and supply becomes less elastic. b. demand becomes less elastic, and supply becomes more elastic. c. both supply and demand become less elastic. d. both supply and demand become more elastic. e. elasticity of both demand and supply tends toward unity.
If the prices of all goods and services rise during the year,
A. real GDP may fall. B. nominal GDP must rise. C. nominal GDP may increase. D. real GDP must rise.
You are a hotel manager and you are considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs andcorresponding payoffs are summarized in the following table.ProjectBoom (50%)Recession (50%)A$20-$10B-$10$20C$30-$30D$50$50Which project has the greatest variance?
A. A B. B C. C D. D