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

Question

Quizplus · Accepted Answer

In the Keynesian framework, when output is below the equilibrium level, it means that demand is higher than what firms anticipated, leading to a decrease in inventories (unplanned inventory investment is negative). Firms respond by increasing (raising) production to meet the higher demand, which in turn causes output to rise until equilibrium is reached.

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