Firms Have Inventories That They Can Draw Down to Meet

Multiple Choice

Firms have inventories that they can draw down to meet an increase in demand. This will

A) have no effect on the multiplier, because the MPC remains unchanged.
B) increase the size of the multiplier, because firms will be able to respond more quickly to a change in demand.
C) decrease the size of the multiplier, because output will not immediately respond to changes in demand.
D) either increase or decrease the multiplier, depending on the size of the MPC.