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22 March, 12:09

Which of the following situations leads to an unplanned increase in inventories of $2.0 trillion? A. real GDP = $5.0 trillion and aggregate planned expenditures = $7.0 trillion B. real GDP = $5.0 trillion and aggregate planned expenditures = $5.0 trillion C. real GDP = $6.0 trillion and aggregate planned expenditures = $4.0 trillion D. real GDP = $8.0 trillion and aggregate planned expenditures = $5.0 trillion E. More information is needed about planned investment and actual investment.

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  1. 22 March, 12:21
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    Answer: C. real GDP = $6.0 trillion and aggregate planned expenditures = $4.0 trillion

    Explanation:

    Unplanned Inventory arises when Real GDP is larger than Planned Expenditure because it must satisfy the below formula,

    Real GDP = Planned + Unplanned expenditure

    For Option C,

    Real GDP = 6.0 trillion,

    Planned expenditure = 4.0 trillion

    Unplanned Expenditure = Real GDP - Planned Expenditure

    = $6.0 trillion - $4.0 trillion

    = $2.0 trillion

    Therefore Option C is correct as it led to a $2.0 trillion increase in Expenditure which translates to inventory.
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Home » Business » Which of the following situations leads to an unplanned increase in inventories of $2.0 trillion? A. real GDP = $5.0 trillion and aggregate planned expenditures = $7.0 trillion B. real GDP = $5.0 trillion and aggregate planned expenditures = $5.
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