Assume We Are at an Income Level Where the C+I+G+X

question 44

Multiple Choice

Assume we are at an income level where the C+I+G+X (consumption+investment+government spending+net exports) function lies above the 45-degree line.We can conclude that at this income level:

• A)unplanned inventories are likely to accumulate.
• B)the economy is in equilibrium.
• C)households will save more money than they spend.
• D)aggregate expenditures are less than output.
• E)there will be pressure to expand production.

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Definitions:

Linear Programming

A mathematical method used to find the best outcome in a model whose requirements are represented by linear relationships.

Sensitivity Analysis

A technique used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Constraints

Limitations or restrictions that impact the decision-making process, often used in the context of optimization problems and project planning.

Feasible Region

Within optimization challenges, the collection of all feasible points that meet the criteria of the problem.