Use the figure above to answer this question. At a price level of of 90,
A) inventories increase and firms will increase production.
B) the aggregate quantity demanded exceeds real GDP and inventories will decrease.
C) people will be forced to cut consumption so that aggregate demand will decrease.
D) the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise.

Question

Quizplus · Accepted Answer

At a price level of 90, the aggregate quantity demanded exceeds real GDP, meaning that there is more demand for goods and services than what the economy is currently producing. As a result, inventories will decrease as firms struggle to keep up with demand.

Use the Figure Above to Answer This Question