When Aggregate Planned Expenditure Exceeds Real GDP

question 76

Multiple Choice

When aggregate planned expenditure exceeds real GDP,

• A) real GDP decreases.
• B) an unplanned increase in inventories occurs.
• C) firms decrease production.
• D) an unplanned decrease in inventories occurs.
• E) real GDP remains at its equilibrium level.

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Definitions:

Workers

Individuals engaged in any form of work, whether in formal employment, self-employment, or voluntary activities, contributing labor to an economy.

Marginal Product

The increase in output that results from employing one more unit of a specific input, keeping all other inputs constant.

Total Product

The total output of goods and services produced by a firm during a specific period of time.

Implicit Costs

The opportunity costs that arise from using resources that could have been employed in an alternative capacity, but do not involve a direct monetary payment.