Question : 51) When the AE line lies above the 45° line, A) : 1227932

 

 

51) When the AE line lies above the 45° line,

A) there are unplanned decreases in inventories.

B) aggregate planned expenditure is less than real GDP.

C) there are unplanned increases in inventories.

D) real GDP exceeds aggregate planned expenditure.

E) the price level is rising.

52) When aggregate planned expenditure exceeds real GDP, there are unplanned ________ in inventories, and firms ________ production, so that real GDP ________.

A) decreases; decrease; increases

B) increases; decrease; decreases

C) increases; increase; increases

D) decreases; increase; increases

E) decreases; decrease; decreases

 

53) Real GDP is $13 trillion and aggregate planned expenditure is $14 trillion. As a result, unplanned inventory change is ________ and real GDP ________.

A) positive; decreases

B) positive; increases

C) negative; increases

D) negative; decreases

E) negative; does not change

 

54) When aggregate planned expenditure exceeds real GDP,

A) firms increase production and real GDP increases.

B) firms decrease production and real GDP increases.

C) firms decrease production and real GDP decreases.

D) firms increase production and real GDP decreases.

E) firms do nothing because induced expenditure will increase so that the equilibrium is reached.

55) If aggregate planned expenditures exceed real GDP, then

A) inventories increase above their planned levels and businesses decrease their production.

B) inventories decrease below their planned levels and businesses increase their production.

C) there is no equilibrium level of real GDP.

D) inventories decrease below their planned levels and businesses decrease their production.

E) unplanned inventory changes equal zero.

 

56) When planned aggregate expenditure is larger than real GDP, actual inventories ________ planned inventories and real GDP ________.

A) are less than; increases

B) are less than; decreases

C) are more than; increases

D) are more than; decreases

E) are not related to; increases

 

57) If the level of real GDP is $14 trillion while aggregate planned expenditure is $15 trillion, then

A) aggregate planned expenditure decreases to reach the equilibrium of $14 trillion.

B) inventories rise more than planned, leading firms to cut production.

C) inventories fall more than planned, leading firms to increase production.

D) real GDP increases and planned expenditure decreases reaching equilibrium in the middle.

E) inventories rise more than planned, leading firms to increase production.

 

58) Which of the following situations lead firms to increase production?

A) real GDP = $16.0 trillion and aggregate planned expenditures = $15.0 trillion

B) real GDP = $12.0 trillion and aggregate planned expenditures = $12.0 trillion

C) real GDP = $15.0 trillion and aggregate planned expenditures = $14.0 trillion

D) real GDP = $15.0 trillion and aggregate planned expenditures = $16.0 trillion

E) Both answers A and C are correct.

59) A country reports that when real GDP is $13.0 trillion, aggregate planned expenditure is $14.0 trillion. When real GDP equals $13.0 trillion,

A) unplanned inventory changes by -$1.0 trillion.

B) unplanned inventory changes by $1.0 trillion.

C) planned inventory changes by $1.0 trillion.

D) planned inventory changes by -$1.0 trillion.

E) both planned and unplanned inventory changes are -$1.0 trillion.

 

60) During 2015, a country reports aggregate planned expenditures of $5 trillion and an actual real GDP of $4 trillion. During 2015,

A) inventories are less than planned.

B) inventories are greater than planned.

C) inventories are unaffected.

D) actual aggregate expenditures are greater than real GDP.

E) actual aggregate expenditures are less than real GDP.

 

 

 

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