Question

When total expenditures are greater than total production, __________ is produced than households want to buy, which leads to __________ in inventory, which signals firms that they have __________, which causes firms to increase production.

Answer 1

When total expenditures are greater than total production, less is produced than households want to buy, which leads to decrease in inventory, which signals firms that they have under-produced, which causes firms to increase production.

Step-by-step explanation:

• When total expenditures are greater than total production, then the business will have low production.
• If the production is lower than the customer's demand then it will decrease in inventory.
• If the production is less than the demand of the customer, then in order to fulfill the gap, we need to increase our production.