Using the Aggregate Expenditures Model, Which of the Following Occurs

question 3

Multiple Choice

Using the aggregate expenditures model, which of the following occurs if aggregate expenditures exceed real GDP?
I.The economy will expand causing an increase in employment.
II.The economy will experience an inflationary gap.
III.The price level will rise.
IV.Actual investment will be less than unplanned investment.

• A)I, II, and IV
• B)I, III, and IV
• C)I and IV
• D)I, II, III, and IV

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Definitions:

Hormesis

A biological phenomenon where a low dose of a harmful substance has a beneficial effect, while a high dose is toxic.

Endocrine System

A network of glands that produce and release hormones to regulate various bodily functions.

Hormones

Chemical messengers produced by the endocrine glands that regulate various bodily functions.

AIDS

Acquired Immune Deficiency Syndrome, a critical illness resulting from the human immunodeficiency virus (HIV) that extensively weakens the immune system.