If planned aggregate expenditure is less than total production,
A)actual inventories will equal planned inventories.
B)firms will experience an unplanned increase in inventories.
C)GDP will increase.
D)the economy is in equilibrium.
E)governments will run budget surpluses.

Question

Quizplus · Accepted Answer

If planned aggregate expenditure is less than total production, it means that there is an excess supply of goods, and firms will be left with unsold inventories, leading to an unplanned increase in inventories. This will cause firms to decrease their production in the future to bring their inventories back to normal levels, which can lead to a slowdown in economic growth.

If Planned Aggregate Expenditure Is Less Than Total Production