In the aggregate expenditures model, if aggregate expenditures (AE) are greater than GDP, then:
A) inventory is depleted.
B) inventory is accumulated.
C) inventory is unchanged.
D) employment decreases.

Question

Quizplus · Accepted Answer

When aggregate expenditures exceed GDP, it means that the economy is demanding more goods and services than are being produced, leading to a depletion of inventories as firms sell more than they are producing.

In the Aggregate Expenditures Model, If Aggregate Expenditures (AE) Are