Consider the Simplest Macro Model with Demand- Determined Output

question 67

Multiple Choice

Consider the simplest macro model with demand- determined output. If desired aggregate expenditure is greater than actual national income, then

• A)inventories will likely begin to fall, causing firms to increase production.
• B)actual national income must be less than the equilibrium level.
• C)both A and B are correct.
• D)inventories will likely begin to rise, causing firms to reduce production.
• E)actual national income must be greater than the equilibrium level.

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Definitions:

Secured Creditors

Creditors who have a legal right to seize collateral if the borrower defaults on the loan associated with that collateral.

Attach Property

The legal process by which a court grants a creditor the right to seize property of a debtor for the fulfillment of a judgment.

Unsecured Creditors

Creditors who have lent money without obtaining specific assets as collateral, thus bearing a higher risk of loss if the debtor defaults.

Secured Creditors

Creditors who have a legal interest in a debtor's property as collateral for a debt, giving them priority over unsecured creditors in claim payments.