In the aggregate expenditures model, if aggregate expenditures (AE) are greater than GDP, then:
A) inventory is unchanged.
B) inventory is accumulated.
C) employment decreases.
D) GDP increases.

Question

Quizplus · Accepted Answer

When AE exceeds GDP, it indicates that the economy is demanding more goods and services than are currently being produced, leading to an increase in production and thus an increase in GDP to meet the higher demand.

In the Aggregate Expenditures Model, If Aggregate Expenditures (AE) Are