In the short-run macro model, if aggregate expenditure is less than GDP, output will
a. decline as firms cut production to stop the buildup of inventories
b. decline as firms increase their prices to stop the buildup of inventories
c. increase as firms increase production to try to stop depletion of inventories
d. increase as firms cut their prices to try to stop depletion of inventories
e. remain unchanged indefinitely unless government takes action
A
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The deadweight loss with perfect price discrimination is
A) equal to the deadweight loss of a single-price monopoly. B) sometimes less than and sometimes more than the deadweight loss of a single-price monopoly. C) more than the deadweight loss of a single-price monopoly. D) zero. E) larger than the deadweight loss with perfect competition.
Which of the following is NOT mentioned as a difficulty the Fed faces when trying to affect aggregate demand in the short run?
A. Lack of direct control B. Lagged results C. Sticky wages and prices D. Incomplete data