Write the word or phase that best completes each statement o

Write the word or phase that best completes each statement or answers the queston.

Solution

(a) If real GDP = $6 trillion, the actual expenditure (real GDP) is lower than planned expenditure. So, firms will sell less output which will result in unintended (unplanned) inventory accumulation.

Actual inventory > Planned inventory.

(b) If real GDP is $12 trillion, actual expenditure is higher than planned, so the firm\'s will sell more output and their inventory will deplete at a faster rate.

Actual inventory < Planned inventory.

(c) Aggregate planned expenditure and real GDP are equal at the level of $9 trillion, which is the equilibrium because planned expenditure equals actual expenditure, so planned inventory equals actual inventory.