The Figure Shows Planned Aggregate Expenditure and Output for an Economy

question 63

Multiple Choice

The figure shows planned aggregate expenditure and output for an economy. If output in this economy is Y₃, we would expect there to be:

• A) a decrease in inventories.
• B) an increase in inventories.
• C) no change in inventories.
• D) an increase in consumption spending.

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Definitions:

Efficient Portfolios

Investment portfolios designed to achieve the highest possible return for a given level of risk.

Standard Deviation

A measure of the dispersion or variability of a set of data points around the mean value, used in statistics and finance.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables on a scatterplot.

Covariance

A statistical measure of the directional relationship between the returns of two assets.