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

question 1

Multiple Choice

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

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

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Definitions:

Consolidated Financial Statements

Financial statements that integrate all assets, liabilities, equity, income, and expenses of a parent company and its subsidiaries, presenting the financial performance of the entire corporate group as a single entity.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's profits or losses.

Investment Accounts

Accounts held at a financial institution that hold investments such as stocks, bonds, mutual funds, and ETFs, often for purposes of earning a return.

Trading Debt Securities

Securities bought and held primarily for sale in the near term to generate income on short-term price differences.