When the change in unplanned inventories is positive, then
A) real GDP is larger than aggregate planned expenditure.
B) real GDP equals aggregate planned expenditure.
C) planned inventories will increase in order to return to equilibrium.
D) real GDP is less than aggregate planned expenditure.
E) economic growth will occur as the economy returns to equilibrium.

Question

Quizplus · Accepted Answer

When the change in unplanned inventories is positive, it means that firms have more goods on hand than they expected, indicating that actual sales were less than anticipated. This situation occurs when real GDP (the total output produced) is larger than aggregate planned expenditure (the total spending planned by all sectors of the economy), as firms produced goods that were not sold as planned.

When the Change in Unplanned Inventories Is Positive, Then