Consumption Is $5 Million,planned Investment Spending Is $8 Million,government Purchases

question 285

Multiple Choice

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million.If GDP during that same time period is equal to $27 million,what unplanned changes in inventories occurred?

• A)There was an unplanned increase in inventories equal to $2 million.
• B)There was no unplanned change in inventories.
• C)There was an unplanned decrease in inventories equal to $2 million.
• D)There was an unplanned decrease in inventories equal to $19 million.

---

Definitions:

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit.

Marginal Cost

The cost of producing one additional unit of a product or service.

Average Variable Cost

Average Variable Cost is the variable cost per unit of output, calculated by dividing total variable costs by total output, illustrating how variable costs change with output levels.

Output

The total amount of goods or services produced by a person, machine, factory, country, etc., within a particular time period.