An Increase in Aggregate Expenditure Has What Effect on the Equilibrium

question 97

Multiple Choice

An increase in aggregate expenditure has what effect on the equilibrium GDP?

• A)Equilibrium GDP rises.
• B)Equilibrium GDP is not affected by an increase in aggregate expenditure.
• C)Equilibrium GDP falls.
• D)Equilibrium GDP may rise or fall depending on the size of the increase in aggregate expenditure relative to the initial level of GDP.

---

Definitions:

Inventory

The goods and materials that a business holds for the ultimate goal of resale or production.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made periodically, typically at the end of an accounting period.

Backpacks

Portable bags carried on one's back, designed to hold items such as books, supplies, or other personal belongings.

Credit

An entry recording an increase in liabilities or equity, or a decrease in assets, reflecting the business transactions' effects on the accounts.