With planned expenditure and the equilibrium condition Y = PE drawn on a graph with income along the horizontal axis, if income exceeds expenditure, then income is to the ______ of equilibrium income and there is unplanned inventory ______.
A) right; decumulation
B) right; accumulation
C) left; decumulation
D) left; accumulation

Question

Quizplus · Accepted Answer

When income exceeds expenditure, it means that not all goods produced are being sold, leading to an accumulation of unsold goods or inventory. This situation places the economy to the right of the equilibrium income on the graph.

With Planned Expenditure and the Equilibrium Condition Y = PE