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ECON201: Exam 3 (Take Home) Multiple Choice Identify the choice that best completes the statement or answers the question. Figure 9-1 Potential 6,000 GDP 45 (billions of dollars per year) C+I+(X-IM) 5,000 F Real Expenditure 4,000 B 3,000 2,000 2,000 3,000 4,000 5,000 6,000 7,000 Real GDP (billions of dollars per year) 1. In Figure 9-1, at $3,000 billion real GDP, a. spending exceeds total output and inventories will fall. b. inventories are constant. C. d. aggregate demand equals aggregate supply. spending falls short of output and inventories will rise. 2. In Figure 9-1, at $7,000 billion real GDP, a. inventories are increasing b. spending falls short of output. C. spending exceeds output. d. Both a and b are correct. 3. In Figure 9-1, a. the 45-degree line represents all points where spending equals output. b. to the left of equilibrium GDP, inventories will fall. c. to the right of equilibrium GDP, inventories will rise. d. All of the above are correct. 4. In Figure 9-1, the economy is a. experiencing an inflationary gap, shown by the horizontal distance EB. b. at full employment without inflation. C. experiencing a recessionary gap, shown by the horizontal distance EB. d. experiencing a recessionary gap, shown by the distance between EF. 1 Page