Suppose the Equilibrium Level of Expenditure Is $600

question 434

Multiple Choice

Suppose the equilibrium level of expenditure is $600. If real GDP is $500, then inventories are
Their target levels and real GDP will .

• A) decreasing below; increase
• B) decreasing below; decrease
• C) increasing above; decrease
• D) increasing above; increase

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Definitions:

Allocative Efficiency

A state of resource allocation in which goods and services are distributed according to consumer preferences, achieving optimal distribution.

Productive Efficiency

A scenario where goods or services are produced at the lowest possible cost and with maximum efficiency in resource usage.

Nonprice Competition

Strategies companies use to differentiate their product or service based on features, service, quality, or brand image rather than price.

Economic Profits

The net amount remaining when all costs, both obvious and not, are subtracted from the total income.