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Use the Following to Answer Questions

Question 14

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Use the following to answer questions .
Exhibit: Aggregate Expenditures and Real GDP 2 Use the following to answer questions . Exhibit: Aggregate Expenditures and Real GDP 2 -(Exhibit: Aggregate Expenditures and Real GDP 2) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I<sub>P</sub> = Planned Investment and Y* = equilibrium real GDP. Suppose AE = C + I<sub>P</sub>, I<sub>P</sub> is autonomous and the consumption function is C = $1,000 billion + 0.75Y. If firms produced a real GDP less than the Y*, A) AE would be greater than real GDP. B) AE would fall short of real GDP. C) actual investment would be greater than I<sub>P</sub>. D) there would be an excess supply real GDP.
-(Exhibit: Aggregate Expenditures and Real GDP 2) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment and Y* = equilibrium real GDP. Suppose AE = C + IP, IP is autonomous and the consumption function is C = $1,000 billion + 0.75Y. If firms produced a real GDP less than the Y*,


A) AE would be greater than real GDP.
B) AE would fall short of real GDP.
C) actual investment would be greater than IP.
D) there would be an excess supply real GDP.

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