Consider the Simplest Macro Model with Demand-Determined Output,where AE =

question 16

Multiple Choice

Consider the simplest macro model with demand-determined output,where AE = C + I.Suppose actual national income is $900 billion and desired consumption plus desired investment is $890 billion.We can expect that

• A)firms will see a decrease in inventories,and they will respond by increasing output,thereby increasing actual national income.
• B)firms will decrease autonomous investment by $10 billion until equilibrium national income is reached at $890 billion.
• C)firms will increase autonomous investment by $10 billion until equilibrium national income is reached at $900 billion.
• D)actual national income will increase until equilibrium national income is reached at $900 billion.
• E)firms will see an increase in inventories,and they will respond by decreasing output,thereby decreasing actual national income.

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Definitions:

Implosion

A psychological therapy technique where a person is intensely exposed to their fears or traumas in their imagination to reduce the related anxiety.

Reactive Inhibition

A psychological process where a previously learned response decreases in strength or frequency due to the repeated presentation of a stimulus, leading to fatigue or boredom.

Relaxation Training

A therapeutic technique focusing on teaching individuals methods to reduce stress and physical tension.

Anxiety Hierarchies

A list of fears arranged in ascending order of intensity, used in therapies like systematic desensitization to gradually confront and reduce anxiety.