Keynesian analysis suggests that if planned spending (aggregate demand)were $700 billion but GDP was $800 billion,
A)businesses would accumulate inventories,and output would fall.
B)output would rise,incomes would rise,and tax revenues would automatically increase.
C)production would be stimulated,and output would increase,unless the full-capacity output was less than $950 billion.
D)the Federal Reserve would eventually lower interest rates.

Question

Quizplus · Accepted Answer

If planned spending (aggregate demand) were $700 billion but GDP was $800 billion, it would mean that businesses are not selling their output, leading to an accumulation of inventories. This would result in a decrease in output to get rid of the unsold goods.

Keynesian Analysis Suggests That If Planned Spending (Aggregate Demand)were $700