Question

What is the effect on​ inventories, GDP, and employment when aggregate expenditure​ (total spending) exceeds​ GDP?
A. Inventories​ increase, GDP​ increases, and employment increases.
B. Inventories​ decrease, GDP​ increases, and employment increases.
C. Inventories​ increase, GDP​ increases, and employment decreases.
D. Inventories​ decrease, GDP​ decreases, and employment increases.

Answer 1

Answer:

B.  Inventories decrease, GDP increases, and employment increases

Explanation:

                 The full form GDP is Gross Domestic Product. It is the measure of the economy of a particular country. GDP may be defined as the total services or goods produced in that particular country. GDP is time specific, it is measured within a given time.

                The fiscal policy framed by the government affects the total produce as well as the total expanses in a country. All this in turn affects the employment and income of the people. It also affects the GDP greatly.

                Thus when then aggregate expenditure​ or the total spending of the government exceeds​ the GDP of a country, the inventories decrease, GDP increases and also the employment increases in the country.

Thus the answer is

B.  Inventories decrease, GDP increases, and employment increases