If the Output Level Is Such That the Aggregate Expenditure

question 44

Multiple Choice

If the output level is such that the aggregate expenditure line lies below the 45-degree line,which of the following is true?

• A) Aggregate expenditure is greater than output,so inventories will increase and output will be raised.
• B) Aggregate expenditure is greater than output,so inventories will decrease and output will be increased.
• C) Aggregate expenditure is less than output,so inventories will decrease and output will be raised.
• D) Aggregate expenditure is less than output,so inventories will increase and output will be lowered.
• E) Aggregate expenditure is greater than output,so inventories will increase and output will be lowered.

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Definitions:

Dixiecrats

A political party officially known as the States' Rights Democratic Party, formed in 1948 by Southern Democrats in opposition to the federal civil rights initiatives.

Taft-Hartley Act

A 1947 federal law that restricted the activities and power of labor unions, including limiting strikes and requiring union leaders to swear they were not communists.

NATO

The North Atlantic Treaty Organization is a military alliance formed for mutual defense against aggression, primarily established in 1949.

Marshall Plan

An American initiative passed in 1948 to aid Western Europe, in which the U.S. gave over $12 billion for economic recovery post-World War II to counter the spread of communism.