If Aggregate Demand exceeds Aggregate Supply, unwanted inventories will begin to accumulate, forcing firms to ______________prices to get rid of those inventories.
A)zero
B)none of these
C)increase
D)reduce

Question

Quizplus · Accepted Answer

When aggregate demand exceeds aggregate supply, there is a shortage of goods, not an accumulation of unwanted inventories. Therefore, firms are more likely to increase prices, not reduce them. However, the question seems to be based on a misunderstanding of economic principles.

If Aggregate Demand Exceeds Aggregate Supply, Unwanted Inventories Will Begin