If firms find that consumers are purchasing less than expected,which of the following would you expect?
A)Aggregate expenditure will likely be greater than GDP.
B)Aggregate expenditure will likely be less than GDP.
C)The economy will adjust to macroeconomic equilibrium as inventories rise,and production and employment rise.
D)The economy will adjust to macroeconomic equilibrium as inventories fall,and production and employment rise.

Question

Quizplus · Accepted Answer

If consumers are purchasing less than expected, it means that aggregate expenditure is likely to be less than GDP. This could lead to a decrease in production and employment if firms end up with unsold inventories, as they may need to cut back on production to avoid further accumulation of inventories. The economy might eventually adjust to macroeconomic equilibrium as firms adjust their production levels to match the lower level of aggregate demand.

If Firms Find That Consumers Are Purchasing Less Than Expected,which