When Current Real Production of Goods and Services (Real GDP)is

question 112

Multiple Choice

When current real production of goods and services (real GDP) is greater than planned aggregate expenditure

• A)inventories of goods and services are rising
• B)firms will increase production to replenish depleted inventories
• C)businesses and households will increase planned aggregate spending because it is in their interest to promote employment
• D)the price level will automatically rise to restore equilibrium in the economy
• E)leakages must equal planned injections

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Definitions:

Domestic Supply

The total amount of goods and services produced within a country's borders available for consumption or export.

Domestic Demand

The sum of all requests for goods and services in a country.

World Price

The international market price of a commodity, determined by global supply and demand.

Per-Unit Tariff

A fixed fee charged by a government on a specific good imported into the country, assessed on a per unit basis.