When Aggregate Planned Expenditure Exceeds Real GDP

question 202

Multiple Choice

When aggregate planned expenditure exceeds real GDP,

• A) firms increase production and real GDP increases.
• B) firms decrease production and real GDP increases.
• C) firms decrease production and real GDP decreases.
• D) firms increase production and real GDP decreases.
• E) firms do nothing because induced expenditure will increase so that the equilibrium is reached.

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Definitions:

Marriage

A legally and socially sanctioned union between individuals that establishes rights and obligations between them.

Money

A medium of exchange in the form of coins and banknotes; used to purchase goods and services or measure value.

Need for Achievement

A psychological drive that influences an individual to pursue and achieve goals.

Delay Gratification

The ability to resist the temptation for an immediate reward and wait for a later, often larger or more enduring reward.