Suppose That in 2014, Firms Discover That Their Inventories Are

question 71

Multiple Choice

Suppose that in 2014, firms discover that their inventories are falling below their planned levels. Which of the following statements is CORRECT?

• A) The level of aggregate savings must equal the level of desired investment.
• B) Even though firms are trying, they are unable to maximize profits.
• C) Aggregate demand is less than aggregate supply.
• D) Real GDP is less than equilibrium expenditure.

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Definitions:

American Participation

The involvement of the United States in international or domestic events, ranging from wars to political movements.

Vietnam War

A prolonged conflict from the 1950s to the 1975 between North Vietnam (supported by its communist allies) and South Vietnam (supported by the United States and other anti-communist countries), resulting in significant political and social upheaval.

Détente

A period of improved relations and reduction in tensions between countries, especially notable between the United States and the Soviet Union during the Cold War.