In the income-expenditure framework,if planned aggregate expenditures are greater than real gross domestic product (GDP),_____.
A)the price level will fall
B)consumption will fall
C)inventories will increase
D)inventories will decrease
E)consumption will decrease

Question

Quizplus · Accepted Answer

When planned aggregate expenditures exceed real GDP, firms find that actual sales are more than expected, leading to a decrease in inventories as goods are sold faster than anticipated.

In the Income-Expenditure Framework,if Planned Aggregate Expenditures Are Greater Than