If aggregate expenditures exceed the domestic output in a private closed economy:
A)leakages will exceed injections.
B)planned investment will exceed saving.
C)unplanned investment in inventories will occur.
D)saving will exceed planned investment.

Question

Quizplus · Accepted Answer

When aggregate expenditures exceed domestic output, it indicates that the total spending in the economy is greater than the total production. This situation leads to a decrease in inventories, as businesses sell more than they produce. Consequently, planned investment (which includes spending on inventories) will exceed saving, as businesses need to invest more to meet the higher demand.

If Aggregate Expenditures Exceed the Domestic Output in a Private