Question

62a. Changes in inventory unplanned investment are used by economists in order to determine

a. changes in business capital.

b. the total value of goods produced and sold in a year.

c. the total value of sold products.

d. the total value of goods produced but not sold in a year.

e. changes in planned investment.

62b. In the income-expenditure analysis, the change in the equilibrium level output that results from a given change in the level of investment is larger the:

a. smaller is the initial level of national income.

b. larger is the marginal propensity to consume.

c. larger is the initial level of aggregate expenditures.

d. smaller the MPC

e. all of the above

62c.

In the Keynesian income-expenditures model, equilibrium occurs when the output produced:

a. equals household consumption.

b. equals the natural unemployment rate.

c. when the expenditure line intersects the 45 degree line.

d. equals planned aggregate expenditures.

e. c and d.

Answer 1

Answer 62.a. total value of goods produced and sold in a year.

reason- unplanned inventory investment is also called change in inventory. Change in inventory is when aggregate expenditure is not equal to aggregate output.

Answer 62. b. larger the marginal propensity to consume

reason- Multiplier=1/(1-mpc)

larger the MPC, larger will be the multiplier. Larger will be the change in output due to change in investment.

Answer 62.c. c and d.

reason- Equilibrium in Income- expenditure model occurs whe. output= planned aggregate expenditure.

planned aggregate expenditure is the 45 degree line.