If Planned Expenditures Equal $2000 When GDP Is $2200, Then

question 18

Multiple Choice

If planned expenditures equal $2000 when GDP is $2200, then

• A) actual investment will exceed planned investment.
• B) the economy must have a trade surplus to sell the excess goods and services.
• C) there will be excess demand for most goods.
• D) inventories will decrease by $200.

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Definitions:

Comparative Advantage

The ability of a country or individual to produce a particular good or service at a lower opportunity cost than another.

Absolute Advantage

The ability of an individual, company, or country to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Producing Goods

The process of creating tangible products that satisfy consumer needs and wants through the utilization of labor, capital, and raw materials.

Opportunity Cost

The cost of an alternative that must be forgone in order to pursue a certain action or the benefits you miss out on when choosing one alternative over another.