In the Aggregate Expenditure Model, When Real GDP Is Greater

question 51

Multiple Choice

In the aggregate expenditure model, when real GDP is greater than aggregate planned expenditure

• A) unplanned inventories are being accumulated.
• B) inventories are being depleted.
• C) inventories are not being changed.
• D) this cannot happen, because the two variables are always equal.

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Definitions:

Sales Tax

A tax imposed by the government on the sale of goods and services.

Labor Market

The labor market is the marketplace where employers find workers and workers find jobs, dictated by supply and demand for labor.

Market Wage Rate

The prevailing rate of pay for a specific job in a given labor market.

Factor Demand Curve

Graphical representation showing the quantity of a factor of production demanded at different prices for that factor.