If Planned Aggregate Expenditure Is Less Than Total Production

question 28

Multiple Choice

If planned aggregate expenditure is less than total production

• A)actual inventories will equal planned inventories.
• B)firms will experience an unplanned increase in inventories.
• C)GDP will increase.
• D)the economy is in equilibrium.

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Definitions:

Net Capital Outflow

The difference between the domestic country's purchase of foreign assets and the foreign purchases of the domestic country's assets over a specified period, reflecting the flow of capital across borders.

Capital Asset

A long-term asset such as equipment, real estate, or machinery that a company uses in its operations to generate wealth.

Loanable Funds

The market where savers provide funds to borrowers, usually influencing interest rates.

Foreign-Currency Exchange

The conversion of one currency into another currency, a critical process for international trade, travel, and investment.