If Planned Expenditures Equal $13 Trillion When Real GDP Is

question 412

Multiple Choice

If planned expenditures equal $13 trillion when real GDP is $13.5 trillion,then

• A) inventories will decrease by $0.5 trillion.
• B) actual investment will exceed planned investment.
• C) there will be excess demand for most goods.
• D) the economy must have a trade surplus to sell the excess goods and services.

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Definitions:

Nominal GDP

The market value of all finished goods and services produced within a country's borders in a specific time period, measured in current prices without adjusting for inflation.

M1 Velocity of Money

The rate at which money circulates in the economy, measured as the ratio of nominal GDP to the money supply (M1), indicating how often a unit of currency is used to purchase domestically-produced goods and services within a given time period.

Financial Innovation

The creation or improvement of financial products, services, technologies, or processes that provide new ways to invest, borrow, lend, and save.

Monetary Policy

The process by which a country's central bank controls the supply of money and interest rates to influence the economy's growth and stability.