If the current price level is lower than the equilibrium price level, then it must be true that total planned
A)government spending is less than total planned tax revenues.
B)government spending exceeds total planned tax revenues.
C)real expenditures are less than total planned production.
D)real expenditures exceed total planned production.

Question

Quizplus · Accepted Answer

If the current price level is lower than the equilibrium price level, it means that the quantity demanded exceeds the quantity supplied, indicating that real expenditures (demand) exceed total planned production (supply). Therefore, the correct choice is D. Choices A and B relate to government fiscal policy and do not necessarily have a direct relationship with the price level. Choice C does not take into account the relationship between supply and demand.

If the Current Price Level Is Lower Than the Equilibrium