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

question 128

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 $890 billion.We can expect that

• A)firms will see a decrease in inventories,and they will respond by increasing output,thereby increasing actual national income.
• B)firms will decrease autonomous investment by $10 billion until equilibrium national income is reached at $890 billion.
• C)firms will increase autonomous investment by $10 billion until equilibrium national income is reached at $900 billion.
• D)actual national income will increase until equilibrium national income is reached at $900 billion.
• E)firms will see an increase in inventories,and they will respond by decreasing output,thereby decreasing actual national income.

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Definitions:

Criminal Conspiracies

Agreements between two or more parties to commit an illegal act or a legal act in an illegal manner.

Duopolists

Refers to two companies or entities that dominate or control an entire market for a particular product or service, shaping prices, supply, and competition.

Monopolist

A monopolist is an entity or firm that has exclusive control over a market for a particular good or service, enabling it to adjust prices without direct competition.

Collude

To cooperate with others, often in secret and unlawfully, in order to deceive or gain an unfair advantage.