If There Is an Unplanned Decrease in Inventories, Aggregate Planned

question 97

Multiple Choice

If there is an unplanned decrease in inventories, aggregate planned expenditure is

• A)greater than real GDP, and firms increase production.
• B)greater than real GDP, and firms decrease production.
• C)less than real GDP, and firms increase production.
• D)less than real GDP, and firms decrease production.
• E)greater than real GDP, and firms increase investment.

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Definitions:

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Cost

Costs that vary directly with the level of production or sales volume.

Net Present Value

A method used in finance to calculate the value of a series of future cash flows by converting them into one lump sum present value.

Net 30 Credit Policy

A Net 30 credit policy is a payment term that allows customers to pay the full invoice amount within 30 days after the invoice date.