If the output level is such that the aggregate expenditure line lies below the 45-degree line, which of the following is true?
a. Aggregate expenditure is greater than output, so inventories will increase and output will be raised.
b. Aggregate expenditure is greater than output, so inventories will decrease and output will be increased.
c. Aggregate expenditure is less than output, so inventories will decrease and output will be raised.
d. Aggregate expenditure is less than output, so inventories will increase and output will be lowered.
e. Aggregate expenditure is greater than output, so inventories will increase and output will be lowered.
D
You might also like to view...
If the price level increases, we would expect consumers to
a. raise their consumption functions. b. move downward along their consumption functions. c. lower their consumption functions. d. move upward along their consumption functions.
Which of the following trade agreements provides for the development of a single market among its members?
A. North American Free Trade Agreement B. World Trade Organization C. European Union D. Asian Pacific Economic Cooperation