If an unintended increase in business inventories occurs at some level of GDP, then GDP
A) entails a rate of aggregate expenditures in excess of the rate of aggregate production.
B) may be either above or below the equilibrium output.
C) is too low for equilibrium.
D) is too high for equilibrium.

Question

Quizplus · Accepted Answer

An unintended increase in business inventories indicates that production has exceeded the rate of spending in the economy. This means that GDP is too high for equilibrium, as businesses are producing more than what is being consumed or invested, leading to an increase in inventories. Therefore, the correct answer is D.

If an Unintended Increase in Business Inventories Occurs at Some