If aggregate planned expenditure is less than real GDP,
A) real GDP remain unchanged.
B) real GDP will either decrease or increase, depending on the MPC.
C) inventories will increase above their target level and real GDP will decrease.
D) real GDP will increase.

Question

Quizplus · Accepted Answer

When aggregate planned expenditure is less than real GDP, it means that there is a decrease in demand in the economy. This will result in an inventory buildup since goods produced are not sold to consumers, causing firms to decrease production and ultimately leading to a decrease in real GDP.

If Aggregate Planned Expenditure Is Less Than Real GDP