When Real GDP Exceeds Aggregate Planned Expenditure

question 139

Multiple Choice

When real GDP exceeds aggregate planned expenditure,

• A)real GDP increases.
• B)an unplanned increase in inventories occurs.
• C)an unplanned decrease in inventories occurs.
• D)firms increase production.
• E)real GDP remains at its equilibrium.

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Definitions:

Opportunity Cost

Opportunity cost refers to the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.

Net Float

The difference between checks written against and deposited in an account and those that have been cleared and charged against the account.

Short-term Investments

Financial assets that are expected to be converted into cash or sold within a short timeframe, usually one year or less.

Zero-balance Account

A checking account set up to maintain a balance of zero by automatically transferring funds from a master account in the exact amount of transactions.