When the total quantity of unsold new Chevrolets increases from 50,000 to 75,000,
A) the economy experiences a period of disinvestment.
B) the economy's level of competition increases.
C) there is an increase in the rate of aggregate output.
D) the producer engages in an inventory investment.

Question

Quizplus · Accepted Answer

An increase in the total quantity of unsold new Chevrolets from 50,000 to 75,000 indicates that the producer (Chevrolet) has engaged in inventory investment by producing more vehicles than the market demands. Hence, the correct choice is D. Option A is incorrect because disinvestment refers to the withdrawal of investments in a particular asset or sector, which is not applicable here. Option B is also incorrect because an increase in unsold inventory does not necessarily indicate an increase in competition. Option C is incorrect because there is no information provided about an increase in the rate of aggregate output.

When the Total Quantity of Unsold New Chevrolets Increases from 50,000