Consider the simple macro model with a constant price level and demand-determined output. Suppose the level of actual national income is less thandesired aggregate expenditure. In this case...a. Inventories will build up, causing national income to rise.b. National income may increase or decrease, depending on therelative sizes of the average propensity to consume and theaverage propensity to save.O c. National income will fall, because desired expenditures are lessthan actual expenditures.d. There will be no change in national income because only actualexpenditure is relevant.e. Shortages of goods and reductions in inventories will causeproducers to increase output and national income to rise.e table below shows the total output and prices for an economy thatoduces only two goods, potatoes and oil. Data is provided for the years008 and 2018.Potatoes ($/ Oil ($ /barrel)Potatoeskkg)Oil (barrels) kg)551000110020085014201865660If 2008 is the base year, the GDP deflator in 2018 was..a. 85.7b. 159.1C. 59.1d. 100.0e.131.66Suppose that in 2018, ABC Corporation produced $6 million worth ofnatural gas pipes but only sells $5 million worth. Is the remaining $1 millicof unsold pipes part of GDP for 2018?a. Yes, since changes in inventories are part of consumptionexpenditures.O b. No, since they are part of the economy's output only when sold.c. No, since changes in inventories are part of actual investment.O d. Yes, since they are part of the economy's output in 2018.e. No, since they are added to existing inventories.

1. Consider a simple macro model with a constant price level and demand - determined output . Given…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Consider the simple macro model with a constant price level and determined output. Suppose the level of actual national income is less than