Real GDP (dollars) 3,0004,0005,0006,0007,0008,000 Consumption expenditure (dollars) 2,5003,2504,0004,7505,5006,250 Investment (dollars) 500500500500500500 Government expenditure (dollars) 500500500500500500 -In the above table, there are no taxes and no imports or exports. If current real GDP is equal to $7,000, then firms will
A) not change production because $7,000 is the equilibrium level of real GDP. B) decrease production to restore inventories to their target level. C) increase production to rebuild inventories to their target level. D) None of the above answers is correct.
Correct Answer:
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