Which of the Following Statements Is True About Equilibrium in the Aggregate

question 89

Multiple Choice

Which of the following statements is true about equilibrium in the aggregate expenditures model?
I. Equilibrium is found at the level of real GDP at which the aggregate expenditures curve crosses the 45-degree line.
II. In equilibrium, real GDP produced equals aggregate expenditures.
III. In equilibrium, inventories equal zero.
IV. In equilibrium, real GDP produced equals potential real GDP.

• A) I only
• B) I and II only
• C) I, II, and III only
• D) I, II, III, and IV

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Definitions:

Plankton

Tiny organisms that float or drift in water, either freshwater or saltwater, constituting a crucial part of aquatic food webs.

Mutualism

A symbiotic relationship between two species in which both species benefit from the interaction.

Mycorrhizae

Symbiotic associations between fungi and the roots of plants, improving nutrient and water uptake.

Epiphytes

Plants that grow on other plants for physical support but do not extract nutrients from their hosts, thus not parasitic.