Firms in a Small Economy Planned That Inventories Would Grow

question 223

Multiple Choice

Firms in a small economy planned that inventories would grow over the past year by $300,000.Over that year,inventories actually grew by $400,000.This implies that

• A)aggregate expenditure that year was less than GDP that year.
• B)there was an unplanned decrease in inventories that year.
• C)there was a planned decrease in inventories that year.
• D)aggregate expenditure that year was equal to GDP that year.

---

Definitions:

Marginal Utility

The change in total utility generated by consuming one additional unit of a good or service.

Uncertain Income

Income that is not guaranteed or predictable, often varying significantly over time or depending on specific conditions.

Constant

A value that does not change and remains steady within a specified context.

Expected Value

The anticipated value for an investment or gamble, calculated as the sum of all possible outcomes weighted by their associated probabilities.