In the Aggregate Expenditure (AE) Model, When Real GDP Exceeds

question 74

Multiple Choice

In the aggregate expenditure (AE) model, when real GDP exceeds aggregate planned expenditure, actual inventories ________ planned inventories and real GDP ________.

• A) exceed; increases
• B) exceed; does not change
• C) exceed; decreases
• D) are less than; increases
• E) are less than; decreases

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Definitions:

Operating Activities

Activities that relate to the company's primary operations, such as sales, delivery of services, and production.

Net Cash

The net cash remaining following the calculation of cash incomes and expenditures.

Operating Activities

Activities and transactions that relate to the primary operations of the company, including revenue-generating activities and other operations-related cash flows.

Accounts Payable

Money owed by a business to its suppliers shown as a liability on the company's balance sheet.