Consider the Simplest Macro Model with a Constant Price Level

question 36

Multiple Choice

Consider the simplest macro model with a constant price level and demand- determined output. If desired aggregate expenditure is less than actual national income, then

• A)actual national income is below the equilibrium level.
• B)actual national income must be above the equilibrium level.
• C)inventories begin to fall, causing national income to fall.
• D)inventories begin to fall, causing firms to increase production.
• E)actual national income must be at equilibrium.

---

Definitions:

Nonobstante Veredicto

A legal judgment that overturns the verdict of a jury, also known as "judgment notwithstanding the verdict."

Substantial Evidence Test

A standard used in legal settings to determine if the evidence in support of a conclusion is adequate and meaningful.

Arbitrary and Capricious Test

A standard of review used by courts to assess the decision-making process of an administrative agency, ensuring decisions were made logically and not randomly.

De Novo Review

A new; over again; a second time. A trial de novo, for example, is a new trial in which the entire case is retried.