If planned aggregate expenditure is greater than total production,
A)actual inventories will equal planned inventories.
B)firms will experience an unplanned increase in inventories.
C)GDP will increase.
D)the economy is in equilibrium.
E)governments are likely to experience growing budget deficits.

Question

Quizplus · Accepted Answer

When planned aggregate expenditure exceeds total production, firms will deplete their inventories to meet the excess demand, leading to an increase in GDP as firms ramp up production to replenish inventories.

If Planned Aggregate Expenditure Is Greater Than Total Production