Refer to the information provided in Figure 23.9 below to answer the question(s) that follow. Figure 23.9
-Refer to Figure 23.9. At aggregate output level $300 million, there is a
A) $75 million unplanned increase in inventories.
B) $75 million unplanned decrease in inventories.
C) $100 million decrease in inventories.
D) $100 million increase in inventories.

Question

Refer to the information provided in Figure 23.9 below to answer the question(s) that follow.  Figure 23.9
-Refer to Figure 23.9. At aggregate output level $300 million, there is a
A) $75 million unplanned increase in inventories. 
B) $75 million unplanned decrease in inventories. 
C) $100 million decrease in inventories. 
D) $100 million increase in inventories.

Quizplus · Accepted Answer

At aggregate output level $300 million, the intersection of the AD and SRAS curves is to the left of the LRAS curve, indicating that actual output is less than potential output. This means that firms are producing less than what consumers are demanding, resulting in unplanned increases in inventories. The distance between the AD and SRAS curves at this level of output is $75 million, indicating an unplanned increase in inventories of $75 million.

Refer to the Information Provided in Figure 23