When unwanted business inventories pile up,which of the following is likely to occur?
A)A lower level of unemployment.
B)A higher level of output.
C)A lower price level.
D)No change in the level of output.

Question

Quizplus · Accepted Answer

When unwanted business inventories pile up, businesses tend to decrease the price level of their products in order to clear out the excess inventory. This leads to a lower price level in the economy as a whole. There is no direct impact on the levels of unemployment or output, and it is unlikely that there will be a higher level of output with excess inventory already present.

When Unwanted Business Inventories Pile Up,which of the Following Is