If Firms Sell Exactly What They Expected to Sell, All

question 201

Multiple Choice

If firms sell exactly what they expected to sell, all of the following will be true except

• A)aggregate expenditure will be greater than GDP.
• B)there is no unplanned change in inventories.
• C)inventories will not change, and GDP and employment will remain stable.
• D)aggregate expenditure will be equal to GDP.
• E)unplanned investment will be zero.

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Definitions:

Cash Flows

The net amount of cash and cash equivalents being transferred into and out of a business.

Accrual Income

This refers to the income that is earned in a fiscal period but not received within the same period.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, indicating the annualized rate of return that makes the net present value of all cash flows from the investment equal to zero.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.