Consider the Simplest Macro Model with a Constant Price Level

Multiple Choice

Consider the simplest macro model with a constant price level and demand- determined output. If desired aggregate expenditure is less than actual national income, then

A) actual national income is below the equilibrium level.
B) actual national income must be above the equilibrium level.
C) inventories begin to fall, causing national income to fall.
D) inventories begin to fall, causing firms to increase production.
E) actual national income must be at equilibrium.