Consider a Simple Macro Model with a Constant Price Level

question 117

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.Suppose the level of actual national income is less than desired aggregate expenditure.In this case,

• A)inventories will build up,causing national income to rise.
• B)national income will fall,because desired expenditures are less than actual expenditures.
• C)shortages of goods and reductions in inventories will cause producers to increase output and national income to rise.
• D)national income may increase or decrease,depending on the relative sizes of the average propensity to consume and the average propensity to save.
• E)there will be no change in national income because only actual expenditure is relevant.

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Definitions:

Contingency Planning

The process of preparing for unexpected events by developing strategies to minimize impacts and continue operations.

Early Identification

The process of recognizing potential issues, opportunities, or conditions at an initial stage to allow for timely intervention.

Contingency Planning

The process of preparing for unforeseen events or circumstances to minimize their possible adverse effects.

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