Figure 12-1
-Refer to Figure 12-1.At point L in the figure above,which of the following is true?
A)Aggregate expenditure is greater than GDP.
B)The economy has achieved macroeconomic equilibrium.
C)Actual inventories are greater than planned inventories.
D)GDP will be increasing.

Question

Figure 12-1 
-Refer to Figure 12-1.At point L in the figure above,which of the following is true?
A)Aggregate expenditure is greater than GDP. 
B)The economy has achieved macroeconomic equilibrium. 
C)Actual inventories are greater than planned inventories. 
D)GDP will be increasing.

Quizplus · Accepted Answer

At point L, the actual inventories are above the planned inventories, indicating that firms are producing more than what is being demanded by consumers. This means that aggregate expenditure is less than GDP, and the economy is in a situation of unplanned inventory accumulation. Therefore, the correct answer is C. Choice A is incorrect because aggregate expenditure is less than GDP at this point. Choice B is incorrect because macroeconomic equilibrium is not achieved when there is unplanned inventory accumulation. Choice D cannot be determined with the given information.

Figure 12-1 -Refer to Figure 12-1.At Point L in the Figure Above,which