If an unplanned increase in business inventories occurs:
A)we can expect aggregate production to be unaffected.
B)we can expect businesses to increase the level of production.
C)we can expect businesses to lower the level of production.
D)aggregate expenditures must exceed the domestic output.

Question

Quizplus · Accepted Answer

An unplanned increase in business inventories suggests that businesses were not able to sell all the goods they produced. As a result, businesses will lower the level of production to reduce inventories and prevent further accumulation of unsold goods.

If an Unplanned Increase in Business Inventories Occurs