Multiple Choice
Assume an economy is in equilibrium at an output level of $2,000 billion. If government spending decreases by $500 billion, then at the output level of $2,000 billion, there is
A) an unplanned rise in inventories.
B) an unplanned fall in inventories.
C) an unplanned inventory change of zero.
D) either an unplanned increase or decrease in inventories depending on the value of the MPC.
Correct Answer:
Verified
Correct Answer:
Verified
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