When aggregate expenditure is less than GDP, which of the following is true?
A)There was an unplanned increase in inventories.
B)Firms spent more on capital goods than they anticipated.
C)Households bought more new homes than they anticipated.
D)unemployment is likely to rise.
E)All of the above must be true when aggregate expenditure is less than GDP.

Question

Quizplus · Accepted Answer

When aggregate expenditure is less than GDP, it means that households and firms are not consuming and investing as much as expected in the economy. This leads to unsold goods and services, resulting in unplanned inventory accumulation. Thus, choice A is the correct answer. Choices B, C, and D are not necessarily true when aggregate expenditure is less than GDP.

When Aggregate Expenditure Is Less Than GDP, Which of the Following