In the Figure Above, If Real GDP Is $6 Trillion

question 69

Multiple Choice

In the figure above, if real GDP is $6 trillion, aggregate planned expenditure is

• A)less than $6 trillion and unplanned inventory changes are positive.
• B)equal to $6 trillion and unplanned inventory changes are positive.
• C)equal to $6 trillion and there are no unplanned inventory changes.
• D)more than $6 trillion and unplanned inventory changes are negative.
• E)equal to $6 trillion and unplanned inventory changes are negative.

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Definitions:

Inventory

A company's merchandise, raw materials, and finished and unfinished products which have not yet been sold.

Matching Principle

An accounting concept that dictates that expenses should be recorded in the same period as the revenues they help to generate.

Expected Economic Life

The anticipated period over which an asset is useful to the owning entity in generating revenue.

Expenses

Costs incurred in the process of earning revenue, typically categorized into operating expenses or non-operating expenses.