-In the Above Figure, If the Level of Real GDP

question 163

Multiple Choice

-In the above figure, if the level of real GDP is $13 trillion,

• A) inventories are equal to the levels planned by firms.
• B) inventories are above the levels planned by firms.
• C) planned expenditures are zero.
• D) inventories are below the levels planned by firms.

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Definitions:

Substitution Effects

The change in the consumption pattern of goods due to a change in their relative price, leading consumers to substitute one good for another.

Labor Market

The input/factor market in which households supply work for wages to firms that demand labor.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute cheaper goods for more expensive ones.

Wage Decrease

A reduction in the pay rate of a worker or a group of workers.