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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Definitions:

Capacity Management

The process of planning and controlling the resources needed to meet product demand while maximizing operational efficiency.

Subcontracting

This refers to the practice of assigning or outsourcing part of the obligations and tasks under a contract to another party known as a subcontractor.

Peak Production

The period of maximum output or productivity in manufacturing or business operations, often coinciding with high demand seasons.

Production Levels

The various quantities of goods and services a company can produce in a given time period using different combinations of resources.