In the short run, with predetermined prices, when output is greater than planned aggregate expenditures:
A)potential output is greater than short-run equilibrium output.
B)potential output is less than short-run equilibrium output.
C)planned investment is less than actual investment.
D)planned investment is greater than actual investment.

Question

Quizplus · Accepted Answer

In this case, planned aggregate expenditure is less than output so unintended inventory is accumulating. That means actual investment, due to growing inventory, is greater than planned investment.

In the Short Run, with Predetermined Prices, When Output Is