Consider the simplest macro model with demand-determined output,where AE = C + I.Suppose that actual national income is $900 billion and desired consumption plus desired investment is $920 billion.We can expect that
A) firms will see an increase in inventories,and they will respond by decreasing output,thereby decreasing actual national income.
B) firms will decrease autonomous investment by $20 billion until equilibrium national income is reached at $900 billion.
C) firms will increase autonomous investment by $20 billion until equilibrium national income is reached at $920 billion.
D) firms will see a decrease in inventories,and they will respond by increasing output,thereby increasing actual national income.
E) actual national income will decrease until equilibrium national income is reached at $900 billion.
Correct Answer:
Verified
Q84: Consider the simplest macro model with a
Q87: Consider the simplest macro model with demand-determined
Q88: Consider the following information describing a closed
Q91: Consider the following information describing a closed
Q92: In a simple macro model with demand-determined
Q94: Consider the following information describing a closed
Q95: Consider the simplest macro model with demand-determined
Q96: In a simple macro model with no
Q96: Consider the following information describing a closed
Q97: Consider the following information describing a closed
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents