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:

Annual Fixed Cost

Fixed costs that a business incurs over a year regardless of its activity level, such as rent, salaries, or insurance.

Technology Use

The application of scientific knowledge for practical purposes, especially in industry and daily life.

Time Efficiency

Refers to the effective use of time to maximize productivity or achieve a task within the shortest possible duration.

Account Analysis

The process of evaluating the sales potential and profitability of individual customer accounts.