If firms find that consumers are purchasing less than expected, which of the following would you expect?
A) The economy will adjust to macroeconomic equilibrium as inventories rise, and production and employment rise.
B) Aggregate expenditure will likely be greater than GDP.
C) The economy will adjust to macroeconomic equilibrium as inventories fall, and production and employment rise.
D) Aggregate expenditure will likely be less than GDP.
Question 2
During the turmoil in the market for subprime mortgages in 2007 and 2008, the Fed increased the volume of discount loans. The goal of the Fed was to
A) reduce unemployment.
B) stimulate economic growth.
C) reduce the rate of inflation.
D) reassure financial markets and promote financial stability.
E) reduce the current account deficit.
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