4. For each event, explain whether the initial effect is a change in planned investment spending or a change in unplanned inventory investment, and indicate the direction of the change.

a. an unexpected increase in consumer spending

b. a sharp rise in the cost of business borrowing

c. a sharp increase in the economy’s growth rate of real GDP

d. an unanticipated fall in sales Solutions appear at the back of the book.

Tackle the Test: Multiple-Choice Questions