If aggregate expenditure was less than GDP,which of the following would happen?
A) Inventories would shrink and GDP would drop in future periods.
B) Inventories would grow and GDP would drop in future periods.
C) Inventories would shrink and GDP would increase in future periods.
D) Inventories would grow and GDP would increase in future periods.
E) Inventories would not change and GDP would drop in future periods.

Question

Quizplus · Accepted Answer

When aggregate expenditure is less than GDP, it means that not all goods and services produced are being purchased, leading to an accumulation of unsold goods, or growing inventories. This typically results in a reduction in future production, causing GDP to drop in future periods.

If Aggregate Expenditure Was Less Than GDP,which of the Following