For a Private Closed Economy, an Unintended Decline in Inventories

question 36

Multiple Choice

For a private closed economy, an unintended decline in inventories suggests that

• A) aggregate expenditures are less than the business sector expected them to be.
• B) aggregate expenditures exceed production.
• C) actual investment exceeds saving.
• D) planned investment is greater than consumption.

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Definitions:

Price

The sum of money needed to buy a product, service, or property.

Demand Curve

The demand curve is a graphical representation showing the relationship between the quantity of a good consumers are willing and able to purchase and its price.

Marginal Revenue

The additional income that is generated by selling one more unit of a good or service.

Competitive Market

A market in which there are many buyers and sellers, so that each has a negligible impact on the market price.