If Aggregate Planned Expenditure Is Less Than Real GDP

question 244

Multiple Choice

If aggregate planned expenditure is less than real GDP,

• A) real GDP remain unchanged.
• B) real GDP will either decrease or increase, depending on the MPC.
• C) inventories will increase above their target level and real GDP will decrease.
• D) real GDP will increase.

---

Definitions:

Corporate Managers

Individuals responsible for making strategic and operational decisions in a company, aiming to achieve organizational objectives.

Principals

Individuals or entities who authorize agents to act on their behalf in various transactions or decisions.

Information Problems

Issues arising from asymmetrical information between buyers and sellers, where one party has more or better information than the other, leading to suboptimal market outcomes.

Inefficient Outcomes

Situations in which resources are not allocated optimally, leading to lost potential value or benefits in an economy or system.