If aggregate expenditures (AE)are less than aggregate output (real GDP), then firms will:
A)have unplanned inventory accumulation.
B)earn above-average profits.
C)expand production and hire more workers.
D)be raising their prices.

Question

Quizplus · Accepted Answer

When aggregate expenditures are less than aggregate output, it means that not all goods produced are being sold, leading to unplanned inventory accumulation as firms are left with excess stock.

If Aggregate Expenditures (AE)are Less Than Aggregate Output (Real GDP)