Income on the horizontal axis at which the vertical distance to the 45-degree line is greater than the vertical distance to the Ep line gives rise to a ________ amount of unplanned inventory investment,and thus ________ pressure on output.
A)positive,upward
B)positive,downward
C)negative,upward
D)negative,downward

Question

Quizplus · Accepted Answer

According to the statement, when the vertical distance to the 45-degree line is less than the vertical distance to the Ep line, it indicates a positive unplanned inventory investment, which leads to upward pressure on output. Therefore, when the reverse is true, i.e., the vertical distance to the 45-degree line is greater than the vertical distance to the Ep line, it gives rise to a positive amount of unplanned inventory investment, which will put downward pressure on output. Hence, the correct choice is B.

Income on the Horizontal Axis at Which the Vertical Distance