What Is the Result If Planned Spending Exceeds Planned Output

question 1

Multiple Choice

What is the result if planned spending exceeds planned output?  

• A) unintended inventory increases 
• B) a reduction in GDP 
• C) a decrease in imports 
• D) unintended inventory reductions

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Definitions:

Economic Profit

The total revenue of a business minus its explicit and implicit costs; a measure of profitability that includes opportunity costs.

Perfectly Competitive Firm

A company that operates in a perfectly competitive market, cannot influence the market price, and produces at an optimal output level.

Profit-maximizing

Profit-maximizing refers to a strategic approach by businesses to adjust their production and pricing to achieve the highest possible profit.

Perfectly Competitive Firm

A hypothetical business in a market where no single company can influence the market price or product quality, leading to an efficient allocation of resources.