If real GDP is $19 trillion and planned aggregate expenditure is $19.5 trillion, inventories will be
A) below their target and real GDP will increase.
B) below their target and real GDP will decrease.
C) above their target and real GDP will decrease.
D) above their target and real GDP will increase.

Question

Quizplus · Accepted Answer

When planned aggregate expenditure exceeds real GDP, it indicates that demand is higher than the current production level, leading to a decrease in inventories. As a result, firms will increase production to meet the higher demand, causing real GDP to increase.

If Real GDP Is $19 Trillion and Planned Aggregate Expenditure