Which of the following does NOT happen when planned aggregate expenditure is greater than output?
A) Real GDP demanded rises.
B) Real GDP demanded falls.
C) Real GDP demanded stays the same.
D) Real GDP demanded first rises, and then falls.

Question

Which of the following does NOT happen when planned aggregate expenditure is greater than output?  
A) Real GDP demanded rises. 
B) Real GDP demanded falls. 
C) Real GDP demanded stays the same. 
D) Real GDP demanded first rises, and then falls.

Quizplus · Accepted Answer

When planned aggregate expenditure is greater than output, it means that there is excess demand in the economy. In this situation, firms will increase production in order to meet the extra demand, resulting in an increase in Real GDP demanded. Therefore, choices A, C and D are incorrect. Choice B is the correct answer, as it states the opposite of what actually happens.

Which of the Following Does NOT Happen When Planned Aggregate