Using the Aggregate Expenditures Model, If Aggregate Expenditures (Aggregate Demand)is

Multiple Choice

Using the aggregate expenditures model, if aggregate expenditures (aggregate demand) is $10 trillion and aggregate output is $10.3 trillion:

A) businesses will accumulate inventories, and output will decline.
B) real output will increase if the full-employment capacity of the economy is greater than $10.3 trillion.
C) inflation will be a problem if the full-employment capacity of the economy exceeds $10.3 trillion.
D) both b and c are correct.