-Use the figure above to answer this question. At a price level of of 90,
A) the aggregate quantity demanded exceeds real GDP and inventories will decrease.
B) inventories increase and firms will increase production.
C) the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise.
D) people will be forced to cut consumption so that aggregate demand will decrease.

Question

-Use the figure above to answer this question. At a price level of of 90,
A) the aggregate quantity demanded exceeds real GDP and inventories will decrease. 
B) inventories increase and firms will increase production. 
C) the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise. 
D) people will be forced to cut consumption so that aggregate demand will decrease.

Quizplus · Accepted Answer

At a price level of 90, if the aggregate quantity demanded exceeds real GDP, it means that the demand for goods and services is higher than what is being produced. This will lead to a decrease in inventories as firms sell more than they produce.

-Use the Figure Above to Answer This Question