Final answer:
If aggregate expenditures are greater than aggregate output in the Keynesian model, then firms will have unplanned inventory depletion. The correct answer is B.
Step-by-step explanation:
If aggregate expenditures are greater than aggregate output in the Keynesian model, then firms will have unplanned inventory depletion.
In the Keynesian model, when aggregate expenditures exceed aggregate output, firms will experience unplanned inventory depletion rather than immediately altering prices or laying off workers.
If aggregate expenditures are greater than aggregate output in the Keynesian model, firms will experience unplanned inventory depletion. In the Keynesian framework, when aggregate expenditures exceed what firms expected to sell, they end up selling goods that were not anticipated to be part of the current period's sales, thus leading to a reduction in inventory levels that was not planned. This can potentially signal to firms that they need to increase production to restock their inventory, not decrease prices or lay off workers.
In contrast, if aggregate output were to be above aggregate expenditures, firms would see an accumulation of unsold inventory. In response, they might consider reducing production, which could involve laying off workers or adjusting prices. The Keynesian approach suggests that economic adjustments are made through changes in production levels rather than prices in the short run. This understanding is critical when considering fiscal policies to manage economic fluctuations.