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:

Rate of Inflation

The percentage increase in the price level of goods and services over a period, typically one year.

Federal Budget Deficits

The difference between what a government spends and what it collects in taxes over a fiscal year, with deficits indicating more spending than revenue.

Money Supply

The full measure of monetary assets within an economy, involving cash, coins, and balances in checking and savings accounts, at a specified moment.

Expansion

The process of a business or economy growing and increasing its production and activities.