In the aggregate expenditures model, if aggregate expenditures equal $800 billion and real GDP equals $600 billion,
A) unplanned inventory accumulation equals $200 billion.
B) unplanned inventory depletion equals $200 billion.
C) consumption plus investment equals $200 billion.
D) net investment equals $200 billion.

Question

Quizplus · Accepted Answer

When aggregate expenditures exceed real GDP, it indicates that the economy is spending more than it is producing, leading to an unplanned inventory depletion of $200 billion.

In the Aggregate Expenditures Model, If Aggregate Expenditures Equal $800