Equilibrium GDP on the Demand Side Occurs When Total Spending

question 197

Multiple Choice

Equilibrium GDP on the demand side occurs when total spending

• A)equals total production, and inventories are zero.
• B)equals total production, and firms are unable to adjust inventories.
• C)exceeds total production, and inventories are rising.
• D)equals total production, and inventories remain at desired levels.
• E)is less than total production, and inventories are falling.

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Definitions:

Unrealized Gain

The increase in value of an asset that has not been sold yet, therefore the gain is not reflected in the income statement.

Consolidated Financial Statements

Financial statements that present the assets and liabilities controlled by the parent company and the total revenues and expenses of the subsidiary companies.

Subsidiary Company

A company that is entirely or majority-owned by another company, referred to as the parent company.

Controlling Interest

Ownership of more than 50% of the common stock of another entity.