Suppose the Equilibrium Level of Expenditure Is $18 Trillion

question 454

Multiple Choice

Suppose the equilibrium level of expenditure is $18 trillion. If real GDP is $17 trillion, then inventories are ________ their target levels and real GDP will ________.

• A) above; increase
• B) above; decrease
• C) below; increase
• D) below; decrease

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Definitions:

Speculate

To engage in a financial transaction with a high risk of losing value but also the potential for substantial gains.

Exchange Rates

The value of one currency for the purpose of conversion to another, indicating how much one currency is worth in terms of another.

Foreign Currency

Money or other forms of payment used in international trade that are issued by foreign governments.

Eurobonds

are international bonds issued in a currency not native to the country where it is issued, offering companies the ability to raise capital in foreign markets.