In the income-expenditure framework,if planned aggregate expenditures are greater than real GDP,
A)the price level will fall
B)consumption must fall
C)inventories will increase
D)inventories will decrease
E)consumption will decrease

Question

Quizplus · Accepted Answer

When planned aggregate expenditures exceed real GDP, it indicates that the economy is spending more than it is producing, leading to a decrease in inventories as businesses sell more goods than they are able to replenish.

In the Income-Expenditure Framework,if Planned Aggregate Expenditures Are Greater Than