When the economy is at its equilibrium GDP level, all of the following will occur, except:
A) Aggregate expenditures = GDP
B) Inventories will be zero
C) Saving equals planned investment
D) There are no unplanned changes in inventories

Question

Quizplus · Accepted Answer

Inventories may not necessarily be zero at equilibrium GDP level. A company may choose to hold some inventory as a precaution against unexpected changes in demand or supply. However, at equilibrium GDP level, there are no unplanned changes in inventories, meaning that firms are producing the same amount of goods as consumers are willing to purchase, and as a result there is no need to adjust inventories. Therefore, the correct statement would be "There are no unplanned changes in inventories" and not "Inventories will be zero" as stated in option B.

When the Economy Is at Its Equilibrium GDP Level, All