When current production of goods and services in an economy is greater than planned aggregate expenditure,_____.
A)inventories of goods and services will increase
B)firms will increase production to replenish depleted inventories
C)businesses and households will increase planned aggregate spending
D)the price level will automatically rise to restore equilibrium in the economy
E)leakages must equal planned injections

Question

Quizplus · Accepted Answer

If current production of goods and services in an economy is greater than planned aggregate expenditure, it means that there is an oversupply of goods and services in the market. As a result, inventories will accumulate because firms are producing more than what is demanded. Therefore, option A is the correct answer.

When Current Production of Goods and Services in an Economy