Suppose GDP is $4,000 billion and aggregate expenditure is $3,750 billion.Inventories will
A) increase by $250 billion
B) increase by $375 billion
C) increase by $400 billion
D) decrease by $250 billion
E) decrease by $375 billion

Question

Quizplus · Accepted Answer

The difference between GDP ($4,000 billion) and aggregate expenditure ($3,750 billion) is $250 billion. This means that actual spending falls short of the economy's output and businesses will increase their inventories by $250 billion to meet the demand.

Suppose GDP Is $4,000 Billion and Aggregate Expenditure Is $3,750