Assume an Economy Is in Equilibrium at an Output Level

question 254

Multiple Choice

Assume an economy is in equilibrium at an output level of $600 billion. If government purchases decrease by $75 billion, then at the output level of $600 billion, there is

• A) an unplanned increase in inventories.
• B) an unplanned inventory change of zero.
• C) either an unplanned increase or decrease in inventories depending on the value of the MPC.
• D) an unplanned decrease in inventories.

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Definitions:

Span Of Control

The number of subordinates that a manager or supervisor can directly control or oversee effectively.

Manager

An individual responsible for directing and overseeing the work of a group of people in achieving specific objectives.

Hierarchy

A system in which members of an organization or society are ranked according to relative status or authority.

Mechanistic Structures

Organizational design frameworks characterized by hierarchical management, clear divisions of labor, and a high degree of formalization and centralization.