-In the above figure, if real GDP is greater than $15 trillion, inventories will be
A) below target levels so firms will increase production.
B) below target levels so firms will decrease production.
C) above target levels so firms will increase production.
D) above target levels so firms will decrease production.

Question

-In the above figure, if real GDP is greater than $15 trillion, inventories will be
A) below target levels so firms will increase production. 
B) below target levels so firms will decrease production. 
C) above target levels so firms will increase production. 
D) above target levels so firms will decrease production.

Quizplus · Accepted Answer

If real GDP is greater than $15 trillion, it implies that production has exceeded the level of aggregate demand, leading to an accumulation of unsold goods. This results in inventories being above target levels, prompting firms to decrease production to bring inventories back to desired levels.

-In the Above Figure, If Real GDP Is Greater Than