If the Level of Real GDP Is $14 Trillion While

question 29

Multiple Choice

If the level of real GDP is $14 trillion while aggregate planned expenditure is $15 trillion, then

• A)inventories rise more than planned, leading firms to increase production.
• B)inventories rise more than planned, leading firms to cut production.
• C)aggregate planned expenditure decreases to reach the equilibrium of $14 trillion.
• D)inventories fall more than planned, leading firms to increase production.
• E)real GDP increases and planned expenditure decreases reaching equilibrium in the middle.

---

Definitions:

Internally Generated

Refers to assets or resources that are created or produced within a company, rather than acquired from external sources.

Straight-Line Method

A method of calculating depreciation of an asset, which assumes the asset will lose an equal amount of value each year over its useful life.

Residual Value

The estimated value that an asset will have at the end of its useful life, also known as salvage value.

Gain Or Loss

The difference between the selling price and the purchase price of an asset, resulting in a financial profit or loss.