Use the following figure to answer the questions : Figure9.9

- If the economy depicted in Figure 9.9 produced at the full-employment output level of $150 billion instead of the equilibrium output level,inventory levels would
A)Remain constant.
B)Increase by $50 billion.
C)Increase by $25 billion.
D)Decrease by $100 billion.

Question

Use the following figure to  answer the questions : Figure9.9
 
- If the economy depicted in Figure 9.9 produced at the full-employment output level of $150 billion instead of the equilibrium output level,inventory levels would
A)Remain constant. 
B)Increase by $50 billion. 
C)Increase by $25 billion. 
D)Decrease by $100 billion.

Quizplus · Accepted Answer

If the economy produces at the full-employment output level of $150 billion, which is above the equilibrium output level, inventories would increase by the difference between the full-employment output and the equilibrium output. If the equilibrium output is $125 billion, then inventories would increase by $25 billion ($150 billion - $125 billion).

Use the Following Figure to Answer the Questions