If aggregate planned expenditure is less than real GDP, then inventories
A)increase and real GDP increases.
B)increase and real GDP falls.
C)decrease and real GDP increases.
D)decrease and real GDP decreases.
E)remain constant and real GDP remains constant.

Question

Quizplus · Accepted Answer

If aggregate planned expenditure is less than real GDP, then firms are not selling all their goods and inventories will increase. As a result, real GDP will fall as there is a decrease in demand for goods and services.

If Aggregate Planned Expenditure Is Less Than Real GDP, Then