When we compare PAE and actual output (Y) if PAE is greater than Y we expect that:
A) eventually production will decrease.
B) eventually production will increase.
C) there will be no change in aggregate production.
D) the government will intervene by cutting down on taxes.

Question

Quizplus · Accepted Answer

When Planned Aggregate Expenditure (PAE) is greater than actual output (Y), it indicates that demand exceeds supply, leading to a depletion of inventories. To meet this higher demand, firms are likely to increase production.

When We Compare PAE and Actual Output (Y) If PAE