Assume an Economy Is in Equilibrium at an Output Level

question 254

Multiple Choice

Assume an economy is in equilibrium at an output level of $600 billion. If government purchases decrease by $75 billion, then at the output level of $600 billion, there is

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

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Definitions:

Accord And Satisfaction

A legal settlement where a dispute is resolved by the parties involved through a mutually agreed upon arrangement, often different from the original agreement.

Discharged Debt

Debt that has been forgiven or cancelled, legally releasing the debtor from the obligation to repay.

Late Charges

Fees imposed for not meeting the payment deadlines as stipulated in a contract or agreement.

Option Contract

A contract granting the holder the right, but not the obligation, to buy or sell an asset at a specified price within a set period.