-Refer to Figure 11-7.If the economy is currently producing at point X,what does the short-run macro model predict will happen?
A) Nothing will happen;the economy is in equilibrium.
B) Prices will rise and firms will increase production.
C) Prices will fall and firms will increase production.
D) Inventories will shrink and firms will increase production.
E) Inventories will accumulate and firms will cut production.

Question

-Refer to Figure 11-7.If the economy is currently producing at point X,what does the short-run macro model predict will happen?
A) Nothing will happen;the economy is in equilibrium. 
B) Prices will rise and firms will increase production. 
C) Prices will fall and firms will increase production. 
D) Inventories will shrink and firms will increase production. 
E) Inventories will accumulate and firms will cut production.

Quizplus · Accepted Answer

If the economy is at point X and not in equilibrium, inventories will shrink as demand exceeds supply, prompting firms to increase production to meet the higher demand.