What would happen in an economy if total planned production exceeded total planned real expenditures?
A) Inventories would be depleted, and firms would tend to lower prices.
B) Inventories would accumulate, and firms would tend to lower prices.
C) Inventories would be depleted, and firms would tend to raise prices.
D) Inventories would accumulate, and firms would tend to raise prices.
B
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If the demand for product X is inelastic, a 4 percent increase in the price of X will:
A. decrease the quantity of X demanded by more than 4 percent. B. decrease the quantity of X demanded by less than 4 percent. C. increase the quantity of X demanded by more than 4 percent. D. increase the quantity of X demanded by less than 4 percent.
The price of hamburgers is $2 and the price of brownies is $4. The consumer has $16 of income. The consumer is purchasing 3 hamburgers and receiving 20 utils for the last hamburger. He is also purchasing 2 brownies and receiving 40 utils for the last
brownie. This set of goods A) is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good. B) is an optimum since the entire income is spent and total utility is maximized. C) is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for brownies. D) is not an optimum because the consumer has not spent all of his money.