When Aggregate Planned Expenditure Is Less Than GDP

question 59

Multiple Choice

When aggregate planned expenditure is less than GDP,

• A) the economy definitely is at its equilibrium expenditure and firms do not change production.
• B) the economy definitely is at its equilibrium expenditure but, even so, firms decrease production.
• C) the economy might be at its equilibrium expenditure and, if it is, firms do not change their production.
• D) firms increase production until the economy reaches equilibrium expenditure.
• E) firms decrease production until the economy reaches equilibrium expenditure.