When aggregate expenditure is less than GDP,which of the following is true?
A)There was an unplanned increase in inventories.
B)Firms spent more on capital goods than they anticipated.
C)Households bought more new homes than they anticipated.
D)All of the above must be true when aggregate expenditure is less than GDP.

Question

Quizplus · Accepted Answer

When aggregate expenditure is less than GDP, it means that there was a gap between the planned production and the actual demand for goods and services. This may lead to businesses accumulating unsold products, resulting in an unplanned increase in inventories. Therefore, choice A is the correct answer. Options B and C can be true in some situations, but they do not provide a general explanation for why aggregate expenditure is less than GDP.

When Aggregate Expenditure Is Less Than GDP,which of the Following