Figure 13-6 -Refer to Figure 13-6. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment, G = Government Purchases. Further, I_P and G are autonomous. If real GDP produced is $4,000, A) consumers and firms would demand more than was produced. B) the economy experiences an inflationary gap. C) firms will experience unplanned inventories accumulation. D) the price level must rise to reduce aggregate expenditures and restore equilibrium.

Question

Quizplus · Accepted Answer

From the figure, at real GDP produced of $4,000, aggregate expenditures are less than real GDP. This implies that firms will not be experiencing enough sales (i.e. more goods and services than they expected to sell). Therefore, they will experience unplanned inventory accumulation.

Figure 13-6 -Refer to Figure 13-6. Let Y = Real GDP, AE