If Aggregate Expenditure Is Less Than GDP,then Inventories Rise and GDP

question 20

True/False

If aggregate expenditure is less than GDP,then inventories rise and GDP falls.

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Definitions:

External Cost

Costs that are not borne by the parties involved in an economic transaction but are suffered by other members of society.

Free-Rider Problem

A situation where individuals consume more than their fair share of a public resource, or shoulder less than a fair share of the costs of its production, without contributing to the resource's provision.

Air Pollution

The presence of harmful or excessive quantities of substances, including gases, particulates, and biological molecules, in the Earth's atmosphere, causing diseases, allergies, or environmental damage.

Donations

Voluntary transfers of resources, including money or goods, from one party to another without the expectation of receiving something in return.