If national income is $1500 billion and the level of planned spending by households and businesses is $1575 billion, then we can say that:
A) there will be an accumulation of inventories and output will rise.
B) there will be an accumulation of inventories and output will fall.
C) there will be an unplanned reduction in inventories and output will fall.
D) there will be an unplanned reduction in inventories and output will rise.

Question

Quizplus · Accepted Answer

When planned spending by households and businesses exceeds national income, it indicates that demand is outstripping supply. This leads to an unplanned reduction in inventories as businesses sell more than anticipated. To meet this higher demand, output will typically rise as businesses increase production.

If National Income Is $1500 Billion and the Level of Planned