Consider a Simple Macro Model with a Constant Price Level

question 14

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.When national income falls short of desired aggregate expenditures,unplanned inventory ________ will induce firms to ________ the rate of output production.

• A)depletion; lower
• B)depletion; raise
• C)buildup; lower
• D)buildup; raise
• E)at zero; maintain the current

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Definitions:

Tariff

A tax imposed by a government on goods and services imported from other countries, used to control trade.

Restrictions

Rules or limitations placed on activities, movements, or trade to control or regulate actions.

World Price

The international market price at which goods are traded between countries; it plays a crucial role in determining local prices and trade policies.

Exported

Goods or services sent from one country to another for sale or trade.