If Aggregate Planned Expenditure Is Greater Than Real GDP

question 256

Multiple Choice

If aggregate planned expenditure is greater than real GDP,

• A) an unplanned decrease in inventories leads to an increase in production.
• B) an unplanned increase in inventories leads to a decrease in production.
• C) a planned decrease in inventories leads to an decrease in production.
• D) a planned increase in inventories leads to an increase in production.
• E) an unplanned decrease in inventories leads to an increase in the price level.

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Definitions:

Lahars

Volcanic mudflows or debris flows composed of a slurry of pyroclastic material, rocky debris, and water, that flow down from a volcano, often following a volcanic eruption.

Basaltic Lava

A type of molten rock that is low in silica and flows easily, typically forming smooth, broad volcanic features.

Shield Volcano

A type of volcano with broad, gently sloping sides, built by the eruption of low-viscosity lava that can flow long distances.

Caldera-forming

Refers to the process through which large craters are formed by the collapse of land following a volcanic eruption.