FIGURE 21-3 -Refer to Figure 21-3.If National Income Is Y₁ and the and the Aggregate

question 41

Multiple Choice

FIGURE 21-3
-Refer to Figure 21-3.If national income is Y₁ and the aggregate expenditure function is AE₁,

• A)the economy is in equilibrium.
• B)there is unintended inventory accumulation and income will rise.
• C)there is unintended inventory accumulation and income will fall.
• D)there is unintended inventory decumulation and income will rise.
• E)there is unintended inventory decumulation and income will fall.

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Definitions:

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, used to cover fixed costs and generate profit.

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operating costs, indicative of its profitability.

Sales Mix

The combination of different products or services that a company sells, each contributing to total sales revenue.

Break-even Point

The point at which total costs and total revenue are equal, meaning no net loss or gain is incurred by the business.