The following question are based on the following information:

-If intended spending falls short of the total value of final goods and services produced
A) GDP will rise.
B) firms will cut back on their production rates.
C) inventories will be depleted faster than firms desire.
D) the aggregate supply curve must be vertical.
E) depreciation exceeds investment.

Question

The following question are based on the following information:
 
-If intended spending falls short of the total value of final goods and services produced
A) GDP will rise. 
B) firms will cut back on their production rates. 
C) inventories will be depleted faster than firms desire. 
D) the aggregate supply curve must be vertical. 
E) depreciation exceeds investment.

Quizplus · Accepted Answer

When intended spending falls short of the total value of final goods and services produced, firms experience a buildup of unsold goods, leading them to cut back on their production rates to adjust to the lower level of demand.

The Following Question Are Based on the Following Information