Consider the Simplest Macro Model with Demand-Determined Output,where AE =

question 133

Multiple Choice

Consider the simplest macro model with demand-determined output,where AE = C + I.Suppose that actual national income is $900 billion and desired consumption plus desired investment is $920 billion.We can expect that

• A)firms will see an increase in inventories,and they will respond by decreasing output,thereby decreasing actual national income.
• B)firms will decrease autonomous investment by $20 billion until equilibrium national income is reached at $900 billion.
• C)firms will increase autonomous investment by $20 billion until equilibrium national income is reached at $920 billion.
• D)firms will see a decrease in inventories,and they will respond by increasing output,thereby increasing actual national income.
• E)actual national income will decrease until equilibrium national income is reached at $900 billion.

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Definitions:

Triceps Brachii

A major muscle of the back of the upper limb responsible for extension of the elbow.

Brachialis

A muscle in the upper arm that flexes the elbow, situated beneath the biceps brachii.

Baker's Cyst

A fluid-filled cyst behind the knee that can cause joint pain and swelling.

Right Knee

Refers specifically to the knee on the right side of the body, an important joint that supports movements such as walking, standing, and bending.