In the Short-Run Macro Model,if GDP = $5 Trillion and Aggregate

question 103

Multiple Choice

In the short-run macro model,if GDP = $5 trillion and aggregate expenditure = $4.6 trillion,we would expect

• A) prices to fall until the additional $0.4 trillion of output was sold
• B) prices to rise
• C) output to rise because businesses anticipate that buyers will spend more in the future to compensate for weak spending in this period
• D) inventories to rise by $0.4 trillion
• E) inventories to shrink by $0.4 trillion

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Definitions:

Face Value

The nominal or dollar value printed on a bond or stock, representing the amount due at maturity for a bond or the value assigned to a stock share at issue.

Effective Interest Rate Method

The effective interest rate method is a technique for calculating the actual interest rate for a loan or financial product over time, considering the effects of compounding.

Interest Expense

The cost incurred by an entity for borrowed funds, often reflected in the payment of interest on loans or debt.

Carrying Value

The value of an asset as shown on a company's balance sheet, accounting for depreciation, amortization, and impairment, also known as the book value.