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

question 31

Multiple Choice

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

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

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Definitions:

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profit that includes all income and expenses except interest and income tax expenses.

Income Statement

A financial statement that shows a company's income and expenses over a specific period, culminating in net profit or loss.

After-Tax Income

The amount of income an individual or corporation retains after all applicable taxes have been deducted.

Depreciation

The accounting process of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.