If Aggregate Expenditure Is Less Than GDP, How Will the Economy

question 19

Multiple Choice

If aggregate expenditure is less than GDP, how will the economy reach macroeconomic equilibrium?

• A)Inventories will decline, and GDP and employment will decline.
• B)Inventories will rise, and GDP and employment will decline.
• C)Inventories will decline, and GDP and employment will rise.
• D)Inventories will rise, and GDP and employment will rise.
• E)Inventories will rise, GDP will rise, and unemployment will fall.

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Definitions:

Construct Validity

Construct validity refers to the degree to which a test measures what it claims, or purports, to be measuring.

Self-Esteem

An individual's subjective evaluation of their own worth or value, encompassing beliefs and emotions about oneself.

Positive Linear Relationship

A relationship between two variables where increases in the value of one variable are associated with increases in the value of the other variable.

Curvilinear Relationship

A relationship between two variables where the change in one variable is not constant with respect to the change in another.