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True or False: The aggregate expenditures model assumes flexible prices. 2. If total spen

True or False: The aggregate expenditures model assumes flexible prices. 2. If total spen

True or False: The aggregate expenditures model assumes flexible prices.

2. If total spending is just sufficient to purchase an economy’s output, then the economy is: 

a. In equilibrium.

b. In recession.

c. In debt.

d. In expansion.

3. True or False: If spending exceeds output, real GDP will decline as firms cut back on production.

4. If inventories unexpectedly rise, then production ________ sales and firms will respond by ________ output.

a. Trails; expanding.

b. Trails; reducing.

c. Exceeds; expanding.

d. Exceeds; reducing.

5. If the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase by:

a. $2 billion.

b. $3 billion.

c. $8 billion.

d. $15 billion.

e. None of the above.

Abhinav 05-Dec-2019

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