Which of the following situations leads to an unplanned increase in inventories of $2.0 trillion?
A) real GDP = $5.0 trillion and aggregate planned expenditures = $7.0 trillion
B) real GDP = $5.0 trillion and aggregate planned expenditures = $5.0 trillion
C) real GDP = $6.0 trillion and aggregate planned expenditures = $4.0 trillion
D) real GDP = $8.0 trillion and aggregate planned expenditures = $5.0 trillion
E) More information is needed about planned investment and actual investment.

Question

Quizplus · Accepted Answer

In situation C, there is an unplanned increase in inventories of $2.0 trillion because aggregate planned expenditures are less than the real GDP. This implies that firms are producing more goods than what consumers are willing to purchase, resulting in an increase in inventories.

Which of the Following Situations Leads to an Unplanned Increase