If at Some Level of GDP the Economy Is Experiencing

question 125

Multiple Choice

If at some level of GDP the economy is experiencing an unplanned decrease in inventories:

• A)the aggregate level of saving will decline.
• B)the price level will fall.
• C)the business sector will lay off workers.
• D)domestic output will increase.

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Definitions:

Consumption Function

An economic formula that represents the relationship between total consumer spending and total national income.

Household Wealth

The total value of all financial and non-financial assets owned by members of a household minus any liabilities.

Consumption Function

An economic formula that expresses the relationship between total consumption and gross national income.

Price Level

An index that measures the average of prices for goods and services in an economy over a period, often used to assess inflation or deflation.