-In the above figure, if real GDP is below $12 trillion, inventories will be
A) below target levels, so firms increase production.
B) above target levels, so firms increase production.
C) above target levels, so firms decrease production.
D) below target levels, so firms decrease production.

Question

-In the above figure, if real GDP is below $12 trillion, inventories will be
A) below target levels, so firms increase production. 
B) above target levels, so firms increase production. 
C) above target levels, so firms decrease production. 
D) below target levels, so firms decrease production.

Quizplus · Accepted Answer

When real GDP is below the equilibrium level, inventories are below target levels because demand exceeds supply, prompting firms to increase production to meet the demand.

-In the Above Figure, If Real GDP Is Below $12