-Refer to Exhibit 10-5

Multiple Choice

-Refer to Exhibit 10-5.When TE is $300 billion,what will firms most likely firms do next?

A) Firms will increase production to increase inventories to their optimum levels.
B) Firms will neither increase nor decrease production since the economy is in equilibrium.
C) Firms will cut back production to reduce inventories to their optimum levels.
D) It is impossible to determine what firms are likely to do based on this information.