Using the Aggregate Expenditures Model, Which of the Following Occurs

question 10

Multiple Choice

Using the aggregate expenditures model, which of the following occurs if aggregate expenditures exceed real GDP?
I. The economy will expand causing an increase in employment.
II. The economy will experience an inflationary gap.
III. The price level will rise.
IV. Actual investment will be less than planned investment.

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

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Definitions:

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