If Aggregate Planned Expenditures Are Less Than Real GDP, Then

question 208

Multiple Choice

If aggregate planned expenditures are less than real GDP, then

• A) inventories increase above their planned levels and businesses decrease their production.
• B) inventories decrease below their planned levels and businesses increase their production.
• C) there is no equilibrium level of real GDP.
• D) inventories increase above their planned levels and businesses increase their production.
• E) unplanned inventory changes equal zero.

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Definitions:

Developing Countries

Nations with a lower level of industrialization, lower standard of living, and lower Human Development Index than developed countries.

Former Soviet Union

Refers to the federation of socialist republics that existed from 1922 to 1991, comprising Russia and other neighboring countries.

GNPs

Gross National Products; the total market value of all the final goods and services produced in a country in a given year, plus the net income from foreign investments.

Developed Countries

Nations with a high level of economic development, technological advancement, and standard of living.