The Figure Shows Planned Aggregate Expenditure and Output for an Economy

question 9

Multiple Choice

The figure shows planned aggregate expenditure and output for an economy. If output in this economy is Y₂, 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:

Government Provision

The action of supplying or making available goods, services, or resources by a government to its citizens.

Economic Goods

Items or services that have monetary value and are scarce in relation to their demand, thus requiring sacrifice to obtain them.

Protective Function

A role often played by governmental bodies to ensure the safety and security of its citizens, through measures like law enforcement and military defense.

Legal Enforcement

The process of ensuring compliance with laws, regulations, and rules through sanctions or penalties.