When real Gross Domestic Product (GDP)exceeds total planned real expenditures,
A)there will be unplanned decreases in inventories.
B)the circular flow will increase.
C)a lower level of equilibrium real Gross Domestic Product (GDP)will result.
D)a higher level of equilibrium real Gross Domestic Product (GDP)will prevail.

Question

Quizplus · Accepted Answer

When real GDP exceeds total planned expenditures, it indicates that production is greater than demand, leading to unplanned increases in inventories. This situation typically results in a reduction in production, causing the equilibrium GDP to decrease.

When Real Gross Domestic Product (GDP)exceeds Total Planned Real Expenditures