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

Question

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

Quizplus · Accepted Answer

When real GDP is greater than $12 trillion, it indicates 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 align with demand.

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