If aggregate output is below its equilibrium level ________.
A)there is an excess demand for goods
B)actual output is below planned expenditure
C)firms will tend to replenish their low inventories driving output up toward equilibrium
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

If aggregate output is below its equilibrium level, there is a difference between actual output and planned expenditure, indicating an excess demand for goods. The excess demand for goods will cause firms to replenish their low inventories, ultimately driving output up toward equilibrium. Therefore, all of options A, B and C are correct.

If Aggregate Output Is Below Its Equilibrium Level ________