Assume an economy is in equilibrium at an output level of $2,000 billion. If government spending decreases by $500 billion, then at the output level of $2,000 billion, there is
A. an unplanned fall in inventories.
B. an unplanned inventory change of zero.
C. an unplanned rise in inventories.
D. either an unplanned increase or decrease in inventories depending on the value of the MPC.
Answer: C
You might also like to view...
Which of the following is most likely to be observed in a community where legal ceilings are imposed on residential rents?
A) Landlords will do a better job of property maintenance. B) People moving into the community will have difficulty locating residential space to rent. C) Poor people will be able to find adequate housing. D) Tenants will reduce their use of housing space. E) The people most in need of housing will be able to obtain the space they want.
The income security program category for federal government outlays includes spending for:
a. Social Security. b. Medicare. c. Welfare. d. Unemployment compensation. e. All of these.
In oligopoly, the actions of one firm have a perceptible effect on the other firms.
Answer the following statement true (T) or false (F)
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward