In the Aggregate Expenditures Model, in Equilibrium

question 10

Multiple Choice

In the aggregate expenditures model, in equilibrium,

• A) consumption equals investment.
• B) unplanned inventory changes equal zero.
• C) inventory changes equal investment.
• D) aggregate expenditures equal consumption.

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Definitions:

Annual Payments

Payments made once a year, often in the context of loan repayments or investment incomes.

Interest

is the cost of borrowing money or the payment received for lending money, typically expressed as an annual percentage of the principal.

Debt

An amount of money borrowed by one party from another, often used to make large purchases that cannot be funded by other means.

Present Value

The current price of a future monetary sum or a succession of cash flows, taking into account a certain rate of interest.