When aggregate demand exceeds current output, Keynesian analysis indicates that
a. unplanned inventory accumulation will cause output to rise.
b. unplanned inventory accumulation will cause output to fall.
c. unplanned inventory reductions will cause output to rise.
d. unplanned inventory reductions will cause output to fall.
C
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Refer to Figure 18.3. After trade and specialization begin, the maximum amount of scooters that Livonia can consume is
A) 120. B) 100. C) 80. D) 40.
The interest rate effect explains that higher prices
a. make it more expensive to borrow, leading to higher interest rates and less investment b. make people worse off by reducing the value of their wealth, leading them to save more and spend less c. decrease borrowing, leading to higher interest rates and less investment d. decrease borrowing, leading to lower interest rates and more investment e. increase borrowing, leading to higher interest rates and less investment