31) Unplanned inventories increase when
A) real GDP is less than aggregate planned expenditure.
B) actual aggregate expenditure is greater than aggregate planned expenditure.
C) actual aggregate expenditure is equal to GDP.
D) aggregate planned expenditure is less than GDP.
E) actual aggregate expenditure is less than GDP.
32) When the change in unplanned inventories is positive, then
A) real GDP is less than aggregate planned expenditure.
B) real GDP equals aggregate planned expenditure.
C) real GDP is larger than aggregate planned expenditure.
D) economic growth will occur as the economy returns to equilibrium.
E) planned inventories will increase in order to return to equilibrium.
33) According to the aggregate expenditure model, when faced with unwanted inventory firms
A) are forced to go out of business.
B) decrease production.
C) immediately cut prices.
D) increase production.
E) do nothing and wait for equilibrium to be restored.
34) If real GDP ________ aggregate planned expenditure, then as a result firms ________ production.
A) equals; increase
B) exceeds; decrease
C) is less than; decrease
D) equals; decrease
E) exceeds; increase
35) A country reports that unplanned inventories increased during 2012. The increase in unplanned inventories leads to
A) the government decreasing production, which decreases GDP.
B) consumers increasing their consumption expenditure, which increases GDP.
C) firms decreasing production, which decreases GDP.
D) firms increasing production, which increases GDP.
E) actual aggregate expenditure being different than real GDP.
36) If a firm accumulates unwanted inventories, then it
A) will increase its production.
B) must hire more workers.
C) has actual investment that is less than its planned investment.
D) will decrease its production.
E) has actual investment equal to its planned investment.
37) If firms' inventories exceed their planned inventories, firms
A) increase production.
B) decrease production.
C) increase GDP.
D) increase income.
E) increase employment.
38) In the aggregate expenditure (AE) model, when real GDP exceeds aggregate planned expenditure, actual inventories ________ planned inventories and real GDP ________.
A) exceed; increases
B) exceed; decreases
C) are less than; increases
D) are less than; decreases
E) exceed; does not change
39) When aggregate planned expenditure is less than GDP,
A) firms increase production until the economy reaches equilibrium expenditure.
B) firms decrease production until the economy reaches equilibrium expenditure.
C) the economy might be at its equilibrium expenditure and if it is, firms do not change their production.
D) the economy definitely is at its equilibrium expenditure and firms do not change production.
E) the economy definitely is at its equilibrium expenditure but even so, firms decrease production.
40) If real GDP exceeds aggregate planned expenditure, then the change in unplanned inventories is ________ and firms ________ production.
A) positive; increase
B) positive; decrease
C) negative; increase
D) negative; decrease
E) zero; do not change
