Undesired or unplanned inventory accumulation is likely to occur when
A)consumption exceeds investment.
B)investment exceeds consumption.
C)autonomous expenditure exceeds induced expenditure.
D)desired aggregate expenditure exceeds actual aggregate expenditure.
E)actual aggregate expenditure exceeds desired aggregate expenditure.

Question

Quizplus · Accepted Answer

When actual aggregate expenditure exceeds desired aggregate expenditure, firms will accumulate unsold inventory, leading to unplanned inventory accumulation. This suggests that production levels have exceeded demand.

Undesired or Unplanned Inventory Accumulation Is Likely to Occur When