If firms find that consumers are purchasing more than expected, which of the following would you expect?
A)Aggregate expenditure will likely be greater than GDP.
B)Aggregate expenditure will likely be less than GDP.
C)The economy will adjust to macroeconomic equilibrium as inventories rise, and production and employment fall.
D)The economy will adjust to macroeconomic equilibrium as inventories fall, and production and employment fall.
E)Firms will see inventories rising.

Question

Quizplus · Accepted Answer

When consumers purchase more than expected, aggregate expenditure exceeds GDP, leading to a decrease in inventories, prompting firms to increase production and employment to meet demand.

If Firms Find That Consumers Are Purchasing More Than Expected