Using the Aggregate Expenditures Model, If Aggregate Expenditures (Aggregate Demand)is

question 194

Multiple Choice

Using the aggregate expenditures model, if aggregate expenditures (aggregate demand) is $10 trillion and aggregate output is $10.3 trillion:

• A)businesses will accumulate inventories, and output will decline.
• B)real output will increase if the full-employment capacity of the economy is greater than $10.3 trillion.
• C)inflation will be a problem if the full-employment capacity of the economy exceeds $10.3 trillion.
• D)both b and c are correct.

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