Assume an Economy Is in Equilibrium at an Output Level

question 145

Multiple Choice

Assume an economy is in equilibrium at an output level of $1,500 billion. If government spending increases by $200 billion, then at the output level of $1,500 billion, there is

• A) an unplanned rise in inventories.
• B) an unplanned fall in inventories.
• C) an unplanned inventory change of zero.
• D) either an unplanned increase or decrease in inventories depending on the value of the MPC.

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Definitions:

Specific Number

A distinct or precisely identified quantity, often used in mathematical or statistical contexts.

Randomly Varying

Describes a process or phenomenon that changes unpredictably, without a discernible pattern or order.

Fixed-interval Schedule

A type of conditioning reinforcement schedule where rewards are provided after a specified time interval has passed.

Continuous Reinforcement

A method of learning where a behavior is reinforced each time it is exhibited, leading to faster acquisition of the behavior.