Answer to Question #50759 in Macroeconomics for bob

Question

If desired aggregate expenditures are less than actual output, aggregate output will decrease.
Explain in detail: True False or Uncertain

Answer 1

If desired aggregate expenditures are less than actual output, aggregate output will decrease, because there is an overproduction of the output, but in equilibrium the aggregate expenditures should be equal to the actual output (AE = Y). So, the statement is True.