Refer to the above table. When real GDP equals 10 A.unplanned inventories will d

ID: 2506401 • Letter: R

Question

Refer to the above table. When real GDP equals 10

A.unplanned inventories will decrease.

B.the economy is in equilibrium.

C.unplanned inventories will increase.

D.government expenditures will increase.

Refer to the above figure. The equilibrium level of real GDP will occur

A.to the left of point A.

B.at point A.

C. at the undetermined point on the graph depending upon the level of investment.

D.to the right of point A.

A firm will invest in a project if

A. they have retained earnings.

B. the interest rate exceeds the opportunity cost of the project.

C. they can borrow and not use retained earnings.

D. the rate of return of the project is greater than the opportunity cost of the investment.

Which of the following is a true statement relative to retained earnings and investment?

A. Lower interest rates stimulate borrowing for investment, but discourage the use of retained earnings for investment.

B. Lower interest rates stimulate borrowing for investment, but have no effect on the use of retained earnings for investment spending.

C. Lower interest rates have no effect on investment spending at all because investment spending is autonomous.

D. Lower interest rates reduce the opportunity cost of retained earnings, stimulating the use of these funds in investment.

Whenever planned investment differs from planned saving,

A. consumption expenditures intersect the 45-degree reference line.

B. nothing happens because planned investment and planned saving always are equal.

C. adjustments in inventories occur that bring actual investment and actual saving into equality.

D. adjustments in consumption spending and saving take place to bring planned investment and planned saving into equality

The marginal propensity to consume is 0.7. There is a $1,000 increase in autonomous consumption. Real GDP will increase by;

A. $3,333

B. $700

C. $1,429