Figure 13-6 -Refer to Figure 13-6. Let Y = Real GDP, AE

question 212

Multiple Choice

Figure 13-6
-Refer to Figure 13-6. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption,
I_P = Planned Investment, G = Government Purchases. Further, I_P and G are autonomous.
If real GDP produced is $4,000, how will equilibrium be restored in the economy?

• A) Policymakers must conduct contractionary policies to move the economy toward its equilibrium real GDP.
• B) Firms will reduce their output in subsequent periods, moving the economy toward its equilibrium real GDP.
• C) The price level must rise to reduce aggregate expenditures and restore equilibrium.
• D) The price level must fall to increase aggregate expenditures and restore equilibrium.

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Definitions:

Caribbean Area

The Caribbean Area is a region consisting of the Caribbean Sea, its islands, and the surrounding coasts, known for its distinct culture, biodiversity, and historical significance.

Slave Trade

The historical trading of enslaved humans, particularly from Africa to the Americas, as part of a triangular trading system involving manufactured goods, slaves, and agricultural products.

Barbados

An island country in the Lesser Antilles of the West Indies, in the Caribbean region of North America, known for its rich history and vibrant culture.