Figure 19.1
-Which of the following is the most likely explanation for the behavior of private inventories between September 2007 and September 2009,as depicted in Figure 19.1?
A)a substantial decline in the desired level of inventories,due to a slump in aggregate demand
B)a substantial decline in the desired level of inventories,as improvements in technology have reduced the size of inventories needed to support both production and customer deliveries
C)an unanticipated draw-down of inventories as the economy was growing much faster than expected
D)a substantial decline in the desired level of inventories,as changes in the tax code increased the cost of holding inventories

Question

Figure 19.1 
-Which of the following is the most likely explanation for the behavior of private inventories between September 2007 and September 2009,as depicted in Figure 19.1?
A)a substantial decline in the desired level of inventories,due to a slump in aggregate demand 
B)a substantial decline in the desired level of inventories,as improvements in technology have reduced the size of inventories needed to support both production and customer deliveries 
C)an unanticipated draw-down of inventories as the economy was growing much faster than expected 
D)a substantial decline in the desired level of inventories,as changes in the tax code increased the cost of holding inventories

Quizplus · Accepted Answer

The behavior of private inventories between September 2007 and September 2009, as depicted in Figure 19.1, shows a substantial decline. This is most likely due to a slump in aggregate demand, which leads businesses to reduce their inventories to match lower levels of expected sales.

Figure 19.1 -Which of the Following Is the Most Likely Explanation for Likely