When aggregate production is less than aggregate expenditures, the economy is in equilibrium. O there are decreases in inventory. O total output will decrease.
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- Which of the following is NOT a component of planned aggregate expenditure? Select one: O a. Planned investment O b. Government purchases O c. Transfer payments d. Net exports O e. ConsumptionExplain the Equilibrium condition of Aggregate Expenditure= output Y. How are inventory changes related to AE and Y?Which of the following is true concerning the relationship between the business cycle and aggregate investment spending? O When the economy is in recession, unemployment rises and income falls. Firms will be less likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has fallen. O When the economy is in recession, unemployment rises and income falls. Firms will be more likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has risen. O When the economy is in recession, unemployment falls and income rises. Firms will be more likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has risen. O When the economy is in recession, unemployment falls and income rises. Firms will be less likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has fallen.
- What is the effect of an increase in investment? When investment increases, A. aggregate demand increases and income increases. The increase in income induçes an increase in consumption expenditure so aggregate demand increases by more than the initial increase in investment B. aggregate demand increases and aggregate supply increases C. aggregate demand increases by an amount equal to the increase in investment O D. aggregate supply increases. The increase in aggregate supply is greater than the increase in investment because capital increases, which increases potential GDP Click to select your answer. MacBook Air DII F11 F12 888 F10 F9 吕0 F7 F8 F6 F5 F4 esc F2 F3 F1 # $ delete @ 7 8 1 2 3 4 P Y Q W E R %3D tab つ K S D F G A aps lock M V B ootion * 00 I くOThe difference between planned aggregate expenditure (PAE) and actual output (Y) is: O the difference between planned and actual inventory investment. O the value of planned investment. O nothing. Planned aggregate expenditure is always equal to actual output. O the value of actual investment.Which of the following components makes up the largest percentage of GDP measured by aggregate spending? O imports O government purchases of goods and services consumer spending investment spending О ехрorts
- Suppose the economy is self-regulating, the price level is 132, the quantity demanded of RealGDP is 4 trillion, the quantity supplied of Real GDP in the short run is 3.9 trillion, and thequantity supplied of Real GDP in the long run is 4.3 trillion. Is the economy in short-runequilibrium? Will the price level in long-run equilibrium be greater than, less than, or equal to132? Show the relevant graph and explain your answers.. If there is a sharp increase in oil prices, in the short run. O. Consumption and investment will fall. O. Consumption will fall, investment will increase, and net exports will fall. O. Consumption, investment, and net exports will stay constant. O. Consumption will fall while investment and net exports will stay constant. O. Consumptionwill fall, net exports will increase, and investment will stay constant.Only a change in the price level can cause shifts in both the aggregate expenditure line and the aggregate demand curve. a. True b. False
- Once more, consider the economy of Economia. If households started buying more houses and firms started buying more assets used to produce things, what would happen to GDP, all else equal? It would rise because I would rise. O It would rise because C would rise. O It would fall because C would fall. O It would fall because I would fall.Potential GDP Aggregate expenditure AE, E, 45° Y. Real GDP (Y) On the 45 degrees line: GDP is equal to aggregate expenditure O B. GDP is greater than aggregate expenditure OC. Aggregate expenditure is constant OD. GDP is constant Aggregate ExpenditureSuppose the economy operates at potential output, if the amount that businesses plan to invest is greater than the amount that consumers plan to save, then The economy will experience inventory accumulation There will be an inflationary gap Equilibrium GDP will be less than aggregate investment There will be a recessionary gap O O O O