Suppose Current Real GDP Is Greater Than Planned Aggregate Expenditure

question 117

Multiple Choice

Suppose current real GDP is greater than planned aggregate expenditure.Which of the following best describes how inventories of goods and services are affected?  

• A) Inventories of goods and services will rise. 
• B) Inventories of goods and services will decline. 
• C) Firms will increase production to replenish depleted inventories. 
• D) Inventories will stay the same.

---

Definitions:

Reaction Formation

A psychological defense mechanism where an individual acts in the opposite way to their unacceptable impulses, often exhibiting exaggerated behavior.

Psychological Defense Mechanism

Strategies employed by the unconscious mind to protect itself from anxiety arising from unacceptable thoughts or feelings.

Freud

Sigmund Freud was a neurologist and the founder of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Defense Mechanisms

Subconscious tools used to safeguard against distress caused by unwanted or unacceptable emotions and ideas.