Unplanned investment occurs when
I. aggregate expenditures exceed real GDP produced.
II. aggregate expenditures fall short of real GDP produced.
III. when real GDP produced is less than potential real GDP.
IV. when real GDP produced is greater than potential real GDP.
A) I and II only
B) I and IV only
C) II and III only
D) I, II, III, and IV

Question

Unplanned investment occurs when 
I. aggregate expenditures exceed real GDP produced.
II. aggregate expenditures fall short of real GDP produced.
III. when real GDP produced is less than potential real GDP.
IV. when real GDP produced is greater than potential real GDP.
A) I and II only
B) I and IV only
C) II and III only
D) I, II, III, and IV

Quizplus · Accepted Answer

Unplanned investment occurs when aggregate expenditures fall short of real GDP produced, which is option II. Option I is incorrect as it describes overproduction, not unplanned investment. Option III is incorrect as it describes a recessionary gap, not necessarily unplanned investment. Option IV is incorrect as it describes overproduction, not unplanned investment. Therefore, the correct answer is A, which includes the only option that accurately describes unplanned investment.

Unplanned Investment Occurs When