If planned aggregate expenditure is less than total production
A)actual inventories will equal planned inventories.
B)firms will experience an unplanned decrease in inventories.
C)GDP will decrease.
D)the economy is in equilibrium.

Question

Quizplus · Accepted Answer

When planned aggregate expenditure is less than total production, firms will have unsold goods, leading to an increase in inventories, prompting them to reduce production, which causes GDP to decrease.

If Planned Aggregate Expenditure Is Less Than Total Production