Suppose an Economy Operates at a Real GDP Level of $855

question 67

Multiple Choice

Suppose an economy operates at a real GDP level of $855, where saving = $400;investment = $95;government spending = $365;taxes = $130;imports = $210;exports = $170.Which of the following statements is true in the light of the given information?

• A)Aggregate expenditures will fall, because total injections exceed total leakages by $110.
• B)Real GDP will increase, because total injections are less than $855.
• C)The economy will be in equilibrium, because leakages equal injections.
• D)Real GDP will fall, because total leakages exceed total injections by $110.
• E)Inventories will rise, because planned saving exceeds planned investment.

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Definitions:

Π Molecular Orbital

A type of molecular orbital formed by the sideways overlap of atomic orbitals, crucial in understanding the bonding in conjugated systems.

Allyl Cation

A positively charged ion with a structure characterized by a carbon atom connected to three other carbon atoms via a sigma bond and two pi bonds, forming a resonance-stabilized intermediate in organic reactions.

Major Organic Product

The foremost substance generated with the highest efficiency in a chemical process involving organic materials.

Nonbonding

Electrons in a molecule that are not involved in bonding but occupy nonbonding molecular orbitals, significantly influencing molecular shape and properties.