Assuming that C + I + G C + I_r + G,then A)aggregate demand exceeds than output. B)unplanned inventories are negative. C)there is an unintended inventory accumulation. D)Both a and c E)None of the above

Question

Assuming that C + I + G > C + I_r + G,then A)aggregate demand exceeds than output. B)unplanned inventories are negative. C)there is an unintended inventory accumulation. D)Both a and c E)None of the above

Quizplus · Accepted Answer

C + I + G represents total aggregate demand in the economy, while C + I_r + G represents total output. If total demand exceeds total output, then there is a gap between what consumers and the government want to purchase and what firms are producing. This can lead to unintended inventory accumulation as firms are producing less than what is being demanded, which is represented by the difference between the two equations (C + I + G - C - I_r - G). Therefore, options A and C are both correct.

Assuming That C + I + G > C