Table 13-2 -Refer to Table 13-2. Consider a Simple Economy That Is

question 160

Multiple Choice

Table 13-2

-Refer to Table 13-2. Consider a simple economy that is made up of only two sectors, households and firms, and that investment is autonomous. Further, disposable personal income = real GDP. Suppose that actual real GDP in this economy is $500 billion in a particular period. We would expect to see

• A) unintended reductions in inventory, planned investment will exceed actual investment.
• B) unintended reductions in inventory, planned investment will be less than actual investment.
• C) unintended increases in inventory, planned investment will exceed actual investment.
• D) unintended increases in inventory, planned investment will be less than actual investment.

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Definitions:

Annual Earnings

The total amount of income earned over the course of a year from employment and other sources.

Geographic Imobility

The hindrance or inability of labor forces to move from one region to another in pursuit of job opportunities.

Market Imperfection

A situation where the assumptions of perfect competition are not met, leading to market failure.

Poor Information

A situation characterized by inaccuracies, unreliability, or incompleteness of data that affects decisions and outcomes.