Use the Following to Answer Questions

question 20

Multiple Choice

Use the following to answer questions .
Exhibit: Aggregate Expenditures (AE) in a Simplified Economy

-(Exhibit: Aggregate Expenditures (AE) in a Simplified Economy) Consider a simple economy that is made up of only two sectors, households and firms, and that investment is autonomous. Further, disposable personal income = real GDP. Suppose that actual real GDP in this economy is $500 billion in a particular period. We would expect to see

• A) unintended reductions in inventory, planned investment will exceed actual investment.
• B) unintended reductions in inventory, planned investment will be less than actual investment.
• C) unintended increases in inventory, planned investment will exceed actual investment.
• D) unintended increases in inventory, planned investment will be less than actual investment.