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G ov ernment Consumption Real GDP, Y (billions of 2005 dollars) Investment, I (billions of expenditure, G (billions of expenditure, C lions of (bil 2005 dollars) 2005 dollars) 2005 dollars) 20 25 30 35 10 14 18 tion. When real GDP is $15 billion, fims inventories experience an unplanned

Real (bill 2005 The above table contains information about the nation of Syldavia There are no income taxes or imports in this nation. When real GDP is O A. decrease of $10 billion 0 B, increase of $5 billion C. increase of $10 billion D. decrease of $1 billion O E. increase of $4 billion Cick to select your answer O Type here to search

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Answer #1

The correct option for the given question would be option D.) Decrease of $1 billion.

Because here Real GDP (Y= $15 billion) and Aggregate Demand is C + I + G = $ (6+5+5) billion

= $ 16 billion

Y is less than aggregate demand. Aggregate Demand is exceeding output, excess demand is met by selling off the goods That the firm had planned to keep as inventories for future. Thus, in this scenario firm's inventories experience an unplanned decrease of $1 billion (16-15).

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