If, at some level of output, total planned real expenditures are less than real Gross Domestic Product (GDP)
A)real GDP will rise.
B)real GDP remains unchanged.
C)real GDP will either fall or remain unchanged, depending on the MPC.
D)unplanned inventories will increase and real GDP will fall.

Question

Quizplus · Accepted Answer

If total planned real expenditures are less than real GDP, then there will be unplanned inventories. This means that businesses have produced more goods than they have sold. To reduce the inventories, businesses will cut back on production, resulting in a decrease in real GDP. Therefore, real GDP will fall in this scenario.

If, at Some Level of Output, Total Planned Real Expenditures