An increase in unplanned inventory investment for the entire economy equals the excess of
A)output over aggregate supply.
B)output over aggregate demand.
C)aggregate supply over output.
D)aggregate demand over output.

Question

Quizplus · Accepted Answer

An increase in unplanned inventory investment means that firms are producing more goods than they are selling, which leads to an excess of output over aggregate demand. The excess supply eventually results in unsold inventories, which are considered unplanned inventory investments.

An Increase in Unplanned Inventory Investment for the Entire Economy