The Figure Given Below Shows the Aggregate Expenditure Curve of an Open

question 106

Multiple Choice

The figure given below shows the aggregate expenditure curve of an open economy.
Figure 10.1
In the figure:
C₁: Consumption
I₁: Investment
G₁: Government spending
X₁: Net Exports
-According to Figure 10.1, when real GDP is at G:

• A) there is pressure for the economy to expand.
• B) there are unplanned reductions in inventory.
• C) aggregate expenditures are less than real GDP.
• D) the economy has achieved macroeconomic equilibrium.
• E) there is pressure for the economy to contract.

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Definitions:

Accounts Payable

the amount a company owes to suppliers or creditors for goods and services bought on credit.

Inventory Decrease

A reduction in the quantity or value of inventory held by a business over a specific period.

Cash Payments

Transactions involving the transfer of cash from one entity to another, usually as exchanges for goods, services, or to settle debts.

Purchases

Transactions involving the buying of goods or services for the purpose of resale or direct use in production or operations.