In a private closed economy, when aggregate expenditures exceed GDP,
A) GDP will decline.
B) business inventories will rise.
C) saving will decline.
D) business inventories will fall.

Question

Quizplus · Accepted Answer

When aggregate expenditures exceed GDP, it means that consumers are spending more than the economy is producing, leading to a decrease in business inventories as goods are being purchased faster than they are being produced.

In a Private Closed Economy, When Aggregate Expenditures Exceed GDP