If planned aggregate expenditure is greater than total production
A)actual inventories will equal planned inventories.
B)firms will experience an unplanned increase in inventories.
C)GDP will increase.
D)the economy is in equilibrium.

Question

Quizplus · Accepted Answer

When planned aggregate expenditure exceeds total production, firms will sell more than they produce, leading to a decrease in inventories and prompting an increase in production, which in turn increases GDP.

If Planned Aggregate Expenditure Is Greater Than Total Production