-In the above figure, point E represents the level of real GDP at which planned saving equals planned investment. At point C
A) unplanned inventories increase.
B) changes in inventories cannot be determined.
C) unused industrial capacity exists in the economy.
D) unplanned inventories decrease.

Question

-In the above figure, point E represents the level of real GDP at which planned saving equals planned investment. At point C
A) unplanned inventories increase. 
B) changes in inventories cannot be determined. 
C) unused industrial capacity exists in the economy. 
D) unplanned inventories decrease.

Quizplus · Accepted Answer

At point C, the economy is producing at a level below where planned saving equals planned investment (point E). This means that actual investment is less than what businesses anticipated, leading to an accumulation of unplanned inventories as goods produced are not sold.

-In the Above Figure, Point E Represents the Level of Real