If Aggregate Planned Expenditure Is Less Than Real GDP

question 420

Multiple Choice

If aggregate planned expenditure is less than real GDP

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

---

Definitions:

Savings

The portion of disposable income not spent on consumption of goods and services, set aside for future use or emergencies.

Investment Funds

Pools of capital from multiple investors used to collectively purchase securities while each investor retains ownership and control of their own shares.

Demand

In economics, demand is the quantity of a good or service that consumers are willing and able to purchase at various prices during a certain period of time.

Great Recession

A severe global economic downturn that began in 2007 and lasted until about 2009, marked by significant declines in the housing market, financial failures, and a surge in unemployment rates.