The following question are based on the following information:

-If intended spending is greater than GDP
A) firms will experience unexpected increases in their planned inventory levels.
B) consumption expenditures must be greater than disposable income.
C) firms will attempt to increase production.
D) GDP will fall.
E) the economy is in declining equilibrium.

Question

The following question are based on the following information:
 
-If intended spending is greater than GDP
A) firms will experience unexpected increases in their planned inventory levels. 
B) consumption expenditures must be greater than disposable income. 
C) firms will attempt to increase production. 
D) GDP will fall. 
E) the economy is in declining equilibrium.

Quizplus · Accepted Answer

If intended spending is greater than GDP, firms will attempt to increase production in order to meet the demand. This may lead to economic growth, but it also has the potential to cause inflation if production cannot keep up with demand. Options A and B do not make sense in this scenario, as they deal with inventory and consumption rather than overall economic output. GDP falling (option D) would be a result of reduced economic activity, not increased spending. Option E, "the economy is in declining equilibrium," is not a commonly used economic term and does not provide a clear explanation.

The Following Question Are Based on the Following Information