If There Is an Unplanned Increase in Inventories, Aggregate Planned

question 143

Multiple Choice

If there is an unplanned increase in inventories, aggregate planned expenditure is

• A)greater than real GDP and firms decrease production.
• B)less than real GDP and firms increase production.
• C)less than real GDP and firms decrease production.
• D)greater than real GDP and firms increase production.
• E)less than real GDP and firms decrease investment.

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Definitions:

Partial Equity Method

A method of accounting for investments where the investor recognizes its share of the profits and losses of the investee, to the extent of its initial investment, in its financial statements.

Noncontrolling Interest

A portion of equity (ownership) interest in a subsidiary not owned by the parent company, reflecting the share of the subsidiary not attributable directly to the parent company's shareholders.

Equipment Undervalued

A situation where the recorded book value of equipment on the financial statements is less than its current market value.

Partial Equity Method

An accounting approach used for investments where the investor has significant influence but not full control, recognizing income based on the proportionate share of the investee's earnings.