In the Aggregate Expenditures Model, If Aggregate Expenditures (AE) Are

question 67

Multiple Choice

In the aggregate expenditures model, if aggregate expenditures (AE) are greater than GDP, then:

• A) inventory is accumulated.
• B) inventory is unchanged.
• C) employment decreases.
• D) employment increases.

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Definitions:

Accumulated Depreciation

The total amount of a tangible fixed asset's cost that has been charged to expense through depreciation over its useful life.

Carrying Amount

The net value of an asset or liability according to a company’s financial statements, calculated as the original cost minus any depreciation, amortization, or impairment costs.

Supplies Account

An account used to track the cost of supplies consumed during a period or the supplies on hand at the end of a period.

Adjusting Entry

A journal entry made at the end of an accounting period to update the ledger for revenues and expenses that have been earned or incurred but not yet recorded.