If Aggregate Planned Expenditure Exceeds Real GDP Then

question 152

Multiple Choice

If aggregate planned expenditure exceeds real GDP then

• A)inventories decrease, and the AE curve shifts downward.
• B)inventories increase, and the AE curve shifts upward.
• C)inventories decrease, and as real GDP increases, a movement up along the AE curve occurs.
• D)inventories increase, and as real GDP increases, a movement up along the AE curve occurs.
• E)inventories increase, and the short-run aggregate supply curve shifts rightward.

---

Definitions:

Decentralization

The distribution of decision-making powers from a central authority to smaller units or individuals within an organization.

Profitability

The ability of a business to earn a profit, which is the balance of revenue after accounting for all expenses, taxes, and costs.

Negotiated Price Approach

An approach to transfer pricing that allows managers of decentralized units to agree (negotiate) among themselves as to the transfer price.

Transfer Price

The price at which divisions of a company transact with each other, such as the sale of goods or services, often used for budgeting and tax purposes.