Suppose the Economy Is Initially at Equilibrium, in Which Total

question 429

Multiple Choice

Suppose the economy is initially at equilibrium, in which total planned real expenditures equals real GDP. Which of the following will occur if there is an increase in autonomous investment?

• A) Inventories will increase immediately and production of goods and services will decrease until real GDP catches up with total planned real expenditures.
• B) Inventories will decrease immediately and production of goods and services will increase until real GDP catches up with total planned real expenditures.
• C) Both inventories and production of goods and services will increase.
• D) Inventories will not change and production of goods and services will not change either.

---

Definitions:

Skills

Specific abilities or expertise that enable a person to perform particular tasks effectively.

Performance Objectives

Specific, measurable goals set for individuals or teams to achieve within a specified timeframe to improve overall performance.

Quantity

The amount or number of a material or immaterial thing not considering its quality or nature.

Timeliness

The quality of being done or occurring at a favorable or appropriate time.