Question
n the aggregate expenditures model, if aggregate expenditures (AE) are less than GDP, then GDP decreases.
True
False
True
False
Answers
GPT-5 mini
True.
If planned aggregate expenditures are less than actual GDP, firms accumulate unintended inventories and respond by reducing production, causing GDP to fall until AE equals GDP.
If planned aggregate expenditures are less than actual GDP, firms accumulate unintended inventories and respond by reducing production, causing GDP to fall until AE equals GDP.