Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million.If GDP during that same time period is equal to $23 million,what unplanned changes in inventories occurred?
A)There was an unplanned increase in inventories equal to $2 million.
B)There was no unplanned change in inventories.
C)There was an unplanned decrease in inventories equal to $2 million.
D)There was an unplanned decrease in inventories equal to $19 million.

Question

Quizplus · Accepted Answer

To find the unplanned changes in inventories, we need to use the equation: 
GDP = Consumption + Planned Investment + Government Purchases + Net Exports + Unplanned Changes in Inventories 
Substituting the given values: 
$23 million = $5 million + $8 million + $10 million + $2 million + Unplanned Changes in Inventories 
Simplifying: 
Unplanned Changes in Inventories = $23 million - $25 million = -$2 million 
This means there was an unplanned decrease in inventories equal to $2 million. Therefore, the correct answer is C.

Consumption Is $5 Million,planned Investment Spending Is $8 Million,government Purchases