A Level of GDP Cannot Be at Equilibrium When Aggregate

question 80

Multiple Choice

A level of GDP cannot be at equilibrium when aggregate demand exceeds output because firms will notice that

• A)inventory stocks are building up.
• B)inventory stocks are being depleted.
• C)their profits are negative.
• D)many of their workers have little to do.

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Definitions:

Rate of Return

A measure of the profitability of an investment, expressed as a percentage of the original investment.

Desired Rate

A targeted rate of return or performance that a company or individual aims to achieve, often used in financial and operational planning.

Present Value Methods

Techniques used to estimate the current value of future cash flows, discounting them at a specified rate.

Current Dollars

A term referring to the value of a monetary unit, such as a dollar, in terms of its purchasing power at the current time, not adjusted for inflation.