Suppose at a particular level of real gross domestic product (GDP),there are no unintended inventory adjustments.In this context,which of the following is true?
A)Real GDP is less than the equilibrium level of real GDP demanded.
B)Real GDP is greater than the equilibrium level of real GDP demanded.
C)Real GDP equals the equilibrium level of real GDP demanded.
D)At equilibrium real GDP,there is no inflation.
E)At equilibrium real GDP,there is no saving.

Question

Quizplus · Accepted Answer

If there are no unintended inventory adjustments, it means that firms are producing the exact amount of goods that are demanded by consumers, and there is no excess supply or excess demand. This implies that real GDP is in equilibrium, and therefore equal to the equilibrium level of real GDP demanded. Therefore, the correct answer is C. The other options are incorrect because they imply either excess supply (A), excess demand (B), or make unrelated statements (D and E).

Suppose at a Particular Level of Real Gross Domestic Product