In the Keynesian framework,as long as output is above the equilibrium level,unplanned inventory investment will remain ________ and firms will continue to ________ production.
A)negative;lower
B)negative;raise
C)positive;lower
D)positive;raise

Question

Quizplus · Accepted Answer

In the Keynesian framework, when output is above the equilibrium level, it means that production exceeds demand, leading to an accumulation of unsold goods or an increase in inventories. This is considered unplanned inventory investment, which is positive because inventories are rising. Firms will respond by lowering production to reduce the excess inventory and align production with demand.

In the Keynesian Framework,as Long as Output Is Above the Equilibrium