What would happen in an economy if total planned production exceeded total planned real expenditures?
A) Inventories would be depleted, and firms would tend to lower prices.
B) Inventories would accumulate, and firms would tend to lower prices.
C) Inventories would be depleted, and firms would tend to raise prices.
D) Inventories would accumulate, and firms would tend to raise prices.

Question

Quizplus · Accepted Answer

If total planned production exceeds total planned real expenditures, inventories will accumulate because there will be unsold goods. In order to clear out the excess inventory, firms will tend to lower prices to encourage consumers to purchase more.

What Would Happen in an Economy If Total Planned Production