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

Question

Quizplus · Accepted Answer

Undesired inventory accumulation occurs when businesses produce more than consumers are willing and able to buy. This can happen when actual aggregate expenditure (the sum of consumer spending, investment, government spending, and net exports) exceeds desired aggregate expenditure (the total level of spending that businesses planned for).

Undesired or Unplanned Inventory Accumulation Is Likely to Occur When