If aggregate expenditure exceeds GDP,we expect inventories to shrink and firms to increase production.

Name: If aggregate expenditure exceeds GDP,we expect inventories to shrink and firms to increase production.
Brand: Quizplus
Rating: 4.8 (36 reviews)

Question

Quizplus · Accepted Answer

If the aggregate expenditure exceeds GDP, it means that there is an increase in demand for goods and services. This would result in firms reducing their inventories to meet the demand and increasing production to keep up with the demand. Thus, the statement is true.

If Aggregate Expenditure Exceeds GDP,we Expect Inventories to Shrink and Firms