What effect would the discovery of new,profitable,technological investment opportunities,combined with inventory levels that have risen far above desired levels,have on aggregate demand (AD)?
A)AD would increase.
B)AD would decrease.
C)AD could either increase or decrease, depending on which change was of a greater magnitude.
D)AD would stay the same.

Question

Quizplus · Accepted Answer

The discovery of new, profitable technological investment opportunities would increase investment spending and potentially increase aggregate demand. However, the high inventory levels suggest that consumers may not be purchasing goods and services at the desired levels, which would decrease aggregate demand. Therefore, the overall effect on aggregate demand would depend on which change has a greater magnitude.

What Effect Would the Discovery of New,profitable,technological Investment Opportunities,combined with Inventory