-The Table Above Gives Data for the Nation of Mosh

question 305

Multiple Choice

$$\begin{array} { c c c c c c } \begin{array} { c } \text { Consumption } \\\text { Real GDP, } Y \\\text { (trillions of }\end{array} & \begin{array} { c } \text { Government } \\\text { (trillions of }\end{array} & \begin{array} { c } \text { Investment, I } \\\text { (trillions of }\end{array} & \begin{array} { c } \text { expenditure, } G \\\text { (trillions of }\end{array} & \begin{array} { c } \text { Exports, } X \\\text { (trillions of }\end{array} & \begin{array} { c } \text { Imports, } M \\\text { (trillions of }\end{array} \\2005 \text { dollars) } & \text { 2005 dollars) } & \text { 2005 dollars) } & \text { 2005 dollars) } & \text { 2005 dollars) } & 2005 \text { dollars) } \\\hline 0 & 1.00 & 2 & 1 & 1 & 0.50 \\1 & 1.75 & 2 & 1 & 1 & 0.75 \\2 & 2.50 & 2 & 1 & 1 & 1.00 \\3 & 3.25 & 2 & 1 & 1 & 1.25 \\4 & 4.00 & 2 & 1 & 1 & 1.50 \\5 & 4.75 & 2 & 1 & 1 & 1.75 \\6 & 5.50 & 2 & 1 & 1 & 2.00 \\7 & 6.25 & 2 & 1 & 1 & 2.25 \\8 & 7.00 & 2 & 1 & 1 & 2.50 \\9 & 7.75 & 2 & 1 & 1 & 2.75 \\10 & 8.50 & 2 & 1 & 1 & 3.00\end{array}$$
-The table above gives data for the nation of Mosh.If real GDP is $10 trillion, then

• A) firms decrease production because inventories exceed their target levels.
• B) firms increase production because inventories are less than their target levels.
• C) the economy has reached equilibrium and no change in production will occur.
• D) firms decrease production because inventories are less than their target levels.
• E) we need more information to determine whether firms increase, decrease, or do not change their production.

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Definitions:

After-tax Salvage Value

The estimated value of an asset at the end of its useful life, after deducting any taxes owed from its disposal.

Required Rate of Return

The minimum expected return an investor demands for the risk associated with holding an investment.

Operating Cash Flow

The cash generated from the normal operating activities of a business over a specific period.

CCA Class

A category within the Capital Cost Allowance system in Canada that groups depreciable assets based on their type and the rate at which they can be depreciated for tax purposes.