Whenever Real GDP Exceeds Planned Aggregate Spending

question 108

Multiple Choice

Whenever real GDP exceeds planned aggregate spending:

• A) firms reduce production, reducing real GDP.
• B) households increase consumption, increasing disposable income.
• C) firms increase production, increasing real GDP.
• D) households decrease consumption, decreasing disposable income.

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Definitions:

Market Price

The current exchange price for an asset or service in the marketplace.

Discount Rate

The interest rate used to determine the present value of future cash flows or to discount future obligations.

Maturity

The predetermined date on which a financial instrument, loan, or security reaches its final payment, at which point the principal amount must be repaid.

Zero-Coupon Bond

A debt security that doesn't pay periodic interest, sold at a discount from its face value, and repays the face value at maturity.