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if CHina economy tends to move toward equilibrium GDP because at output levels greater than equilibrium...

if CHina economy tends to move toward equilibrium GDP because at output levels greater than equilibrium GDP, inventories are

  • Decreasing, and actual investment exceeds planned investment.

  • Decreasing, and actual investment is less than planned investment.

  • Increasing, and actual investment exceeds planned investment.

  • Increasing, and actual investment is less than planned investment.

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Answer #1

Since output is greater than equilibrium that means economy is under inflationary gap which reflect that because of high output inventories will come down and since inventories are coming down actual investment should be lower than planned investment other wise if actual investment is higher inventory will pile up and companies will produce less and lower GDP would be there.

Hence, inventories are decreasing and actual investment is less than planned investment

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