If unplanned inventory investment is positive, then
A) planned investment must be zero.
B) planned aggregate spending must be greater than aggregate output.
C) planned aggregate spending must be less than aggregate output.
D) planned aggregate spending must equal aggregate output.

Question

Quizplus · Accepted Answer

When unplanned inventory investment is positive, it means that firms have ended up with more inventory than they anticipated, which occurs because actual sales (or aggregate spending) were less than what was expected. Therefore, planned aggregate spending must be less than aggregate output, as the excess output becomes unplanned inventory.

If Unplanned Inventory Investment Is Positive, Then