In the short run, firms are more likely to respond to demand shocks by altering inventory levels than by changing how much they produce.

Name: In the short run, firms are more likely to respond to demand shocks by altering inventory levels than by changing how much they produce.
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In the short run, firms often adjust inventory levels to respond to demand shocks because changing production levels can be more costly and time-consuming.

In the Short Run, Firms Are More Likely to Respond