-Use the figure above to answer this question. At a price level of 110,
A) real GDP is greater than the aggregate quantity demanded and firms will cut production.
B) inventories will decrease.
C) real GDP is less than the aggregate quantity demanded and firms will increase production.
D) real GDP less than the aggregate quantity demanded and firms will increase prices.

Question

-Use the figure above to answer this question. At a price level of 110,
A) real GDP is greater than the aggregate quantity demanded and firms will cut production. 
B) inventories will decrease. 
C) real GDP is less than the aggregate quantity demanded and firms will increase production. 
D) real GDP less than the aggregate quantity demanded and firms will increase prices.

Quizplus · Accepted Answer

At a price level of 110, if real GDP is greater than the aggregate quantity demanded, it means there is an excess supply, leading firms to cut production to avoid excess inventory.

-Use the Figure Above to Answer This Question