If an unplanned increase in business inventories occurs at some level of GDP, then GDP:
A)entails a rate of aggregate expenditures in excess of the rate of aggregate production.
B)may be either above or below the equilibrium output.
C)is too low for equilibrium.
D)will decrease.

Question

Quizplus · Accepted Answer

An unplanned increase in business inventories suggests that goods are being produced faster than they are being sold, indicating that aggregate production exceeds aggregate expenditures. This typically leads to a decrease in GDP as businesses cut back on production to reduce excess inventory.

If an Unplanned Increase in Business Inventories Occurs at Some