Assume an Economy Is in Equilibrium at an Output Level

question 175

Multiple Choice

Assume an economy is in equilibrium at an output level of $1,600 billion. If government purchases increase by $200 billion, then at the output level of $1,600 billion, there is

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

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Definitions:

Progress

Forward or onward movement towards achieving a goal or completing a task.

Recognition

The act of identifying someone or something from previous encounters or knowledge.

Greeting

A word or gesture of welcome or acknowledgment used when meeting or encountering someone.

Broad Opening

A wide and inclusive beginning or introduction, often used to capture attention.