If aggregate planned expenditure exceeds real GDP, how do inventories change and how does that impact the economy?

Question

Answer

Inventories increase, and as real GDP increases, the economy moves up along the  AE  curve occurs.

Answer

Inventories increase, and firms increase production, which shifts the  AE  curve upward.

Answer

Inventories decrease, and as real GDP increases, the economy moves up along the  AE  curve occurs.

Answer

Inventories decrease, which shifts the  AE  curve downward.

Answer

Inventories increase, which shifts the  AE  curve upward.

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