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Author Question: Which of the following situations leads to an unplanned increase in inventories of 2.0 trillion? ... (Read 36 times)

soccerdreamer_17

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on: Jun 29, 2018
Which of the following situations leads to an unplanned increase in inventories of 2.0 trillion?
 
  A) real GDP = 5.0 trillion and aggregate planned expenditures = 5.0 trillion
  B) real GDP = 6.0 trillion and aggregate planned expenditures = 4.0 trillion
  C) real GDP = 8.0 trillion and aggregate planned expenditures = 5.0 trillion
  D) real GDP = 5.0 trillion and aggregate planned expenditures = 7.0 trillion
  E) More information is needed about planned investment and actual investment.

Question 2

If country A has a higher level of real GDP per person than country B, then people in Country A must enjoy a higher standard of living than people in Country B. Is this statement true or false and explain your answer.
 
  What will be an ideal response?


joshbk44

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Reply #1 on: Jun 29, 2018
Answer to Question 1

B

Answer to Question 2

The statement is false. Factors other than real GDP per person affect the standard of living. For instance, factors such as household production, underground production, leisure time, and environmental quality all affect the standard of living and all are omitted from real GDP per person. In addition, the standard of living is influenced by health and life expectancy as well as by the nation's political freedom and social justice, none of which is measured by real GDP per person. Although real GDP per person is an important factor in determining a country's standard of living, it is not the only factor.


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soccerdreamer_17

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Reply #2 on: Jun 29, 2018
Thank you :)


joshbk44

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Reply #3 on: Jun 29, 2018
Happy to help you


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