If the Level of Real GDP Is $14 Trillion While

question 90

Multiple Choice

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

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

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Definitions:

Income Summary

The income summary account is used in accounting to transfer revenue and expense account balances to determine the net income or loss for a given period before closing them to the retained earnings account.

Owner's Capital

The amount of money and assets invested in a business by its owner, representing the owner's claim against the company's assets.

Operating Cycle

The operating cycle, also known as the cash conversion cycle, is the time it takes for a company to purchase inventory, sell products or services, and collect the cash from these transactions.

Receivables

Money owed to a company by its customers or other parties for goods or services delivered but not yet paid for.