Question

9-11

QUESTION 9 The slope of the saving function is the MPS. © APC MPC. APS. QUESTION 10 Whenever total planned expenditures differ from real GDP government spending will adjust. unplanned inventories will change. unplanned inventories will remain unchanged. tax revenues will move the economy back to equilibrium. QUESTION 11 Consumption goods include spending on machines and buildings so that goods can be produced in the future. are goods that are used to make other goods. are only the goods bought by households for immediate satisfaction include goods such as CDs that a music store holds in inventory.

Answer 1

9. The slope of the saving function is (change in S/ Change in Y) = MPS. Hence,option(A) is correct.

10. Whenever total planned expenditures differ from real GDP ,the unplanned inventories will change and when aggregate expenditure equals real GDP, there is no change in unplanned inventories. Hence,option(B) is correct.

11. Consumption goods are only the goods bought by households for immediate satisfaction.Hence,option(C) is correct.