Consider a Simple Macro Model with a Constant Price Level

question 151

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.Suppose desired aggregate expenditures are less than the current level of national income.The vertical distance between the AE curve and the 45-degree line represents

• A)desired accumulation of inventories.
• B)desired decumulation of inventories.
• C)the amount by which output exceeds desired expenditures.
• D)the output gap.
• E)the amount by which desired expenditures exceeds output.

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