According to the Keynesian model of macroeconomics, aggregate planned expenditure (PE) is determined as the sum of planned consumption expenditures (C), planned investment expenditures (I), planned government expenditures (G) and planned net exports (NX):

When aggregate planned expenditure is less than GDP there is an unintended?

If aggregate planned expenditure is less than real GDP (the AE curve is below the 45° line), an unplanned increase in inventories induces firms to fire workers and decrease production, so real GDP decreases.

When planned aggregate expenditure is less than real GDP as in the diagram to the right?

When planned aggregate expenditure is less than real​ GDP, as in the diagram to the​ right, what happens to​ firms' inventories? Inventories accumulate if production is not scaled back.