Assume there is a decrease in government purchases and exports.Currently there is a recessionary gap,which implies that
A)Inventories are accumulating.
B)Inventories are being depleted.
C)Desired spending is greater than output.
D)Investment is greater than saving.

Question

Quizplus · Accepted Answer

In a recessionary gap, output is less than desired spending, leading to an accumulation of inventories as businesses produce more goods than are being purchased.

Assume There Is a Decrease in Government Purchases and Exports