If Prices Are Fixed, When Aggregate Planned Expenditure Exceeds Real

question 283

Multiple Choice

If prices are fixed, when aggregate planned expenditure exceeds real GDP, then

• A) inventories decrease, signaling firms to increase production and increase real GDP.
• B) profits fall, signaling firms to decrease production and decrease real GDP.
• C) inventories increase, signaling firms to decrease production and decrease real GDP.
• D) None of the above answers are correct.

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Definitions:

Ontario Savings Bonds

Debt securities issued by the Province of Ontario, offering investors a fixed return over a specific period.

Canada Savings Bonds

A type of savings bond issued by the Government of Canada, offering a fixed interest rate over a certain period.

Reduction Of

A decrease in amount, size, intensity, or the number of something, often referring to cost, price, or rates.

Increase

A rise in quantity, size, value, or extent.