When aggregate expenditure is greater than GDP, then there will be an:
A) Unplanned increase in inventories and GDP will increase
B) Unplanned decrease in inventories and GDP will increase
C) Unplanned increase in inventories and GDP will decrease
D) Unplanned decrease in inventories and GDP will decrease

Question

Quizplus · Accepted Answer

When aggregate expenditure exceeds GDP, firms sell more than they produce, leading to an unplanned decrease in inventories. This typically results in an increase in GDP as firms ramp up production to meet demand.

When Aggregate Expenditure Is Greater Than GDP, Then There Will