23.1 Q&A

Inventories refer to Usually at at the beginning of a recession, inventories.... but at the beginning of an expansion, inventories

goods that have been produced but have not been sold rise / fall Usually at at the beginning of a recession, inventories rise, but at the beginning of an expansion, inventories fall

What is the key idea in the aggregated expenditures model?

in any particular year, the level of GDP is determined mainly by the level of aggregated expenditures

An article in the WSJ about the automobile industry... A car is "restocked" in this context when a car..? Information on current sales can help predict future productions of automobiles because..?

is sold and another one is delivered to replace it as more cars are ordered by retail sellers, more cars need to be produced

Suppose Apple plans to produce 16.5m Iphones this year. It expects to sell 14.0m and add 2.5m to the inventory. Suppose at the end of the year, Apple has sold 14.2m iPhones. What was Apples planned investment spending What was apples actual investment spending?

2.5 million (difference between production and planned sales aka inventory) 2.3 (difference between production and actual sales) 16.5-14.2

Which of the following statements is correct?

Actual investment will equal planned investment only when there is no unplanned change in inventories

[Real-time data analysis] From April to July 2015, business inventories increased by $12bn. Can we tell from this information whether aggregated expenditure was higher or lower than GDP during this quarter?

Aggregated expenditures was less than GDP

Aggregated expenditures, or the total amount of spending in the economy, equals

consumption spending plus planned investments plus government spending plus net exports

Into which category of aggregated expenditures would the following transaction fall? Prudential Insurance Company purchases 250 new computers from Dell The Jones family buys a new car The Jones family buys a new house

Investment expenditures Consumption spending. Investment spending

When aggregated expenditures is greater than GDP, inventories will.... and GDP and total employment will....

fall / increase

Which of the following does the aggregated expenditures model seek to explain?

the business circle

Macroeconomic equilibrium occurs where

total spending, or aggregated expenditures, equals total production, or GDP