Figure 12-1
-Refer to Figure 12-1.What will happen next when the economy is at point J?
A)Inventories have fallen below their desired level,and firms decrease production.
B)Inventories have fallen below their desired level,and firms increase production.
C)Inventories have risen above their desired level,and firms decrease production.
D)Inventories have risen above their desired level,and firms increase production.

Question

Figure 12-1 
-Refer to Figure 12-1.What will happen next when the economy is at point J?
A)Inventories have fallen below their desired level,and firms decrease production. 
B)Inventories have fallen below their desired level,and firms increase production. 
C)Inventories have risen above their desired level,and firms decrease production. 
D)Inventories have risen above their desired level,and firms increase production.

Quizplus · Accepted Answer

Point J represents a situation where inventories have fallen below their desired level. This signals to firms that demand is greater than their current level of production, suggesting an opportunity for increased sales and profits. Therefore, firms are likely to increase production to meet this higher level of demand.

Figure 12-1 -Refer to Figure 12-1.What Will Happen Next When the Economy