The equilibrium level of GDP is associated with
A) an excess of planned investment over saving.
B) no unintended changes in inventories.
C) an unintended decrease in business inventories.
D) an unintended increase in business inventories.

Question

Quizplus · Accepted Answer

At the equilibrium level of GDP, there are no unintended changes in inventories. This means that businesses are producing exactly the amount of goods and services that are being demanded by consumers and other players in the economy. If businesses were experiencing unintended changes in inventories, this would suggest that they are producing more or less than what is being demanded and the economy is not in equilibrium.

The Equilibrium Level of GDP Is Associated with