Figure 10-1

-If the price level in Figure 10-1 were 110,
A)inventories would be accumulating.
B)firms would have to lower their prices.
C)aggregate quantity demanded would equal aggregate quantity supplied.
D)shortages of goods would exist.

Question

Figure 10-1
​ 
-If the price level in Figure 10-1 were 110,
A)inventories would be accumulating. 
B)firms would have to lower their prices. 
C)aggregate quantity demanded would equal aggregate quantity supplied. 
D)shortages of goods would exist.

Quizplus · Accepted Answer

At a price level of 110, the aggregate quantity demanded would be equal to the aggregate quantity supplied, indicating that the economy would be at equilibrium. There would be no accumulation of inventories or shortages of goods. Firms may not necessarily have to lower their prices if they are able to sell all of their output at the current price level.

Figure 10-1 ​

Figure 10-1