Multiple Choice
Suppose that the economy experiences an unplanned increase in its inventories. Firms will react by:
A) increasing their output and as a result, equilibrium income rises.
B) not changing their output because the disequilibrium in inventories will be self-correcting.
C) reducing their output and as a result, equilibrium income falls.
D) reducing their output with no significant change on equilibrium income.
Correct Answer:
Verified
Correct Answer:
Verified
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