A Level of GDP Cannot Be at Equilibrium When Aggregate

question 80

Multiple Choice

A level of GDP cannot be at equilibrium when aggregate demand exceeds output because firms will notice that

• A)inventory stocks are building up.
• B)inventory stocks are being depleted.
• C)their profits are negative.
• D)many of their workers have little to do.

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Definitions:

Long Bonds

Bonds with maturities typically longer than 10 years, often used to lock in interest rates.

Variance

A statistical measure that captures the dispersion of a set of data points around their mean, indicating how spread out the data is.

Probability Range

A span of values within which a random variable is expected to fall, governing the likelihood of different outcomes.

Risk Premium

The return in excess of the risk-free rate of return that investors demand for choosing a risky investment.