Consider the Simplest Macro Model with Demand- Determined Output, Where

question 41

Multiple Choice

Consider the simplest macro model with demand- determined output, where AE = C + I. Suppose that actual national income is $900 billion and desired consumption plus desired investment is $920 billion. We can expect that

• A)firms will decrease autonomous investment by $20 billion until equilibrium national income is reached at $900 billion.
• B)firms will see an increase in inventories, and they will respond by decreasing output, thereby decreasing actual national income.
• C)actual national income will decrease until equilibrium national income is reached at $900 billion.
• D)firms will see a decrease in inventories, and they will respond by increasing output, thereby increasing actual national income.
• E)firms will increase autonomous investment by $20 billion until equilibrium national income is reached at $920 billion.

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Definitions:

PDR

Stands for the Physicians' Desk Reference, a comprehensive drug and prescription reference manual.

Antiplatelets

Medications that prevent blood cells called platelets from clumping together to form a blood clot, reducing the risk of heart attacks and strokes.

Bronchodilator

Medication that makes breathing easier by relaxing the muscles in the lungs and widening the airways (bronchi).

Orphan Drug

A pharmaceutical agent developed specifically to treat a rare medical condition, the so-called "orphan" diseases.