If real GDP is $2 billion and planned aggregate expenditure is $2.25 billion, inventories will
A) be depleted and real GDP will increase.
B) be depleted and real GDP will decrease.
C) pile up and real GDP will increase.
D) pile up and real GDP will decrease.

Question

Quizplus · Accepted Answer

When planned aggregate expenditure exceeds real GDP, it indicates that demand is higher than the current production, leading to a depletion of inventories. As a result, firms will increase production to meet the higher demand, causing real GDP to increase.

If Real GDP Is $2 Billion and Planned Aggregate Expenditure