Consumption spending is $22 million, planned investment spending is $7 million, actual investment spending is $7 million, government purchases are $9 million, and net export spending is $3 million.Based on this information, which of the following is true?
A)There was an unplanned increase in inventories.
B)Aggregate expenditure is equal to GDP.
C)Aggregate expenditure is greater than GDP.
D)Aggregate expenditure is less than GDP.
E)There was an unplanned decrease in inventories.

Question

Quizplus · Accepted Answer

Aggregate expenditure can be calculated as follows: 
AE = Consumption spending + Planned investment spending + Government purchases + Net export spending 
= $22 million + $7 million + $9 million + $3 million 
= $41 million 
Since there is no information given about any change in inventories, we cannot determine whether there was an unplanned increase or decrease in inventories. However, since aggregate expenditure is equal to GDP in this case, we can conclude that the economy is in macroeconomic equilibrium.

Consumption Spending Is $22 Million, Planned Investment Spending Is $7