Assume an Economy Is in Equilibrium at an Output Level

Multiple Choice

Assume an economy is in equilibrium at an output level of $1,500 billion. If government spending increases by $200 billion, then at the output level of $1,500 billion, there is

A) an unplanned rise in inventories.
B) an unplanned fall in inventories.
C) an unplanned inventory change of zero.
D) either an unplanned increase or decrease in inventories depending on the value of the MPC.