Assume an Economy Is in Equilibrium at an Output Level

question 175

Multiple Choice

Assume an economy is in equilibrium at an output level of $1,600 billion. If government purchases increase by $200 billion, then at the output level of $1,600 billion, there is

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

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Definitions:

Enforceable

A term used to describe a legal document, such as a contract or agreement, that can be upheld or compelled by law.

Assumes The Risk

A legal principle stating that a person voluntarily exposes themselves to known hazards, accepting any incurred harm or loss.

Future

In a general context, 'future' refers to the time or a period of time following the moment of speaking or writing; in finance, it often pertains to a contract to buy or sell an asset at a later date.

Exaggeration

A statement that represents something as better or worse than it really is, often used for emphasis or effect.