Difficulty: Medium Figure 13-4

question 162

Multiple Choice

Difficulty: Medium Figure 13-4
-Refer to Figure 13-4. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment. Suppose AE = C + I_P, and I_P is autonomous. At a real GDP of $5,000 billion,

• A) planned investment is greater than actual investment.
• B) planned investment equals actual investment.
• C) planned investment is less than actual investment.
• D) there will be no unplanned investment.

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Definitions:

Prefer

Expressing a choice or inclination towards one option or item over another.

Market Basket

A set of goods and services that are typically consumed by a household or used to track the cost of living or inflation.

Perfect Substitutes

Goods or services that can be used in place of one another with no loss of utility by the consumer.

Perfect Complements

Goods that are always used together in fixed proportions, such that the utility derived from consuming one good increases the utility of consuming the other.