A private closed economy will expand when
A) actual GDP is less than potential GDP.
B) unplanned decreases in inventories occur.
C) aggregate expenditures are less than GDP.
D) unplanned increases in inventories occur.

Question

Quizplus · Accepted Answer

Unplanned decreases in inventories indicate that demand is higher than expected, prompting businesses to increase production, leading to economic expansion.

A Private Closed Economy Will Expand When