48. If inventories rise during a given year, this implies that: A. that Gross do

Question

48. If inventories rise during a given year, this implies that: A. that Gross domestic product has increased as a result. B. that Gross domestic product has decreased as a result. C. that national income has risen for that year. D. that personal income has fallen for that year. E. none of the above. 49. Inflation is defined as a: A. core rate of price increases. B. general rising of prices over time. C. any price hike that would be considered comprehensive. D. price hike on durable goods. 50. The core rate of inflation excludes: A. energy and food prices B. housing and clothing prices C. alcoholic beverages and wines D. none of the above.

Explanation / Answer

(48) (D)

If, during a year, personal income falls, consumption demand and aggregate expenditure falls, therefore firms cannot sell all their output and as a result inventory increases.

(49) (B)

Inflation is a sustained increase in aggregate price level in the economy.

(50) (A)

Core rate of inflation excludes the volatile items like food and energy.

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