If actual aggregate expenditure equals aggregate planned expenditure, then
A) there is never any change in firms' inventories.
B) unplanned inventory changes are positive.
C) firms obtain the desired change in their inventories.
D) unplanned inventory changes are negative.
E) actual aggregate expenditure might be greater than, equal to, or less than real GDP.

Question

Quizplus · Accepted Answer

If actual aggregate expenditure equals aggregate planned expenditure, then firms are able to obtain the desired change in their inventories, meaning that there are no unplanned changes in inventory levels. This is because actual aggregate expenditure represents the total amount of goods and services that are purchased in the economy, while aggregate planned expenditure represents the total amount of goods and services that firms plan to sell. Therefore, if both of these quantities are equal, then firms are able to sell all of the goods and services they have produced, without any unplanned changes in inventory levels.

If Actual Aggregate Expenditure Equals Aggregate Planned Expenditure, Then