In One Year, a Firm Increases Its Production by $9

question 110

Multiple Choice

In one year, a firm increases its production by $9 million and increases sales by $8 million. All other things in the economy remaining the same, which of the following is true?

• A)GDP increases by $8 million and inventory investment decreases by $1 million.
• B)Inventory investment decreases by $1 million.
• C)GDP increases by $9 million and inventory investment increases by $1 million.
• D)GDP increases by $17 million.
• E)GDP increases by $8 million and investment increases by $1 million.

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Definitions:

Value And Exchange

The principle that the worth of goods and services is determined through the process of trading them in markets, where their value is influenced by supply and demand.

Objective Value

The perceived worth of a good or service based on its ability to fulfill a need or want, as opposed to subjective personal preferences.

Opportunity Cost

The cost of foregone alternatives, representing the benefits that could have been received by choosing the next best alternative.

Subjective Values

The personal importance or worth that an individual places on a good or service, which can vary greatly between people.