Which of the following is correct if real GDP is $20 trillion and spending is $20.5 trillion?
A) Inventories increase by 0.5 trillion.
B) Inventories decrease by 0.5 trillion.
C) GDP increases by 0.5 trillion.
D) GDP decreases by 0.5 trillion.
E) Spending and GDP are in equilibrium.

Question

Quizplus · Accepted Answer

When spending exceeds real GDP, it indicates that consumers are buying more goods than the economy is producing, leading to a decrease in inventories by the difference, which is $0.5 trillion in this case.

Which of the Following Is Correct If Real GDP Is