-In the above figure, if real GDP is below $300 billion, inventories will be
A) below target levels, so firms increase production.
B) above target levels, so firms increase production.
C) above target levels, so firms decrease production.
D) below target levels, so firms decrease production.

Question

-In the above figure, if real GDP is below $300 billion, inventories will be
A) below target levels, so firms increase production. 
B) above target levels, so firms increase production. 
C) above target levels, so firms decrease production. 
D) below target levels, so firms decrease production.

Quizplus · Accepted Answer

If real GDP is below $300 billion, it indicates that the actual output is less than the desired level, leading to inventories being below target levels. As a result, firms will increase production to replenish inventories and meet demand.

-In the Above Figure, If Real GDP Is Below $300