Ignoring the government and foreign sectors, if planned investment spending is $500 billion, planned saving is $800 billion, and real Gross Domestic Product (GDP)is $13 trillion, then unplanned inventories will
A)decrease $300 billion.
B)increase $300 billion.
C)increase $800 billion.
D)not change.

Question

Quizplus · Accepted Answer

Unplanned inventories will increase by $300 billion because planned saving ($800 billion) exceeds planned investment spending ($500 billion) by $300 billion, indicating that not all output is being purchased, leading to an accumulation of inventories.

Ignoring the Government and Foreign Sectors, If Planned Investment Spending