Assume a simple macroeconomic model. When inventories rise unexpectedly,
a. income is above its equilibrium value.
b. income will rise until it reaches its equilibrium value.
c. total spending is higher than total output.
d. All of the above.
a
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The hands-off view of the classical school rests on which of the following two simple propositions about markets?
a. Demand creates its own supply and markets are basically competitive. b. Industrial policy is inevitable and all prices are flexible. c. Market failure occurs and prices are rigid. d. Wages are sticky downward and market failure is inevitable. e. Markets are basically competitive and prices are flexible.
The three phases of consumption behavior—each identified by a different MPC—of Modigliani's life-cycle hypothesis are
a. young adults, middle age, and near or in retirement b. apprentice, skilled, professional c. staff, manager, senior manager d. agricultural, industrial, services e. urban, rural, international