If Planned Aggregate Expenditure Is Greater Than Total Production

question 315

Multiple Choice

If planned aggregate expenditure is greater than total production,

• A)actual inventories will equal planned inventories.
• B)firms will experience an unplanned decrease in inventories.
• C)GDP will decrease.
• D)the economy is in equilibrium.
• E)firms are likely to cut back on production.

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Definitions:

Fresh Tomatoes

Refers to tomatoes that are recently harvested and have not been processed, often used in cooking for their flavor and nutritional value.

Highly Elastic

Referring to a situation where the quantity demanded or supplied responds significantly to changes in price.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers over a period of time.

Consumer Surplus

The difference between the maximum price consumers are willing to pay and the price they actually pay. It is the net gain derived by the buyers of the good.