Desired Level of the Capital Stock
-Consider the two graphs above.Suppose producers forecast a decrease in sales.This would ________ the desired level of inventories,as depicted in graph ________.
A)increase;B
B)increase;A
C)decrease;B
D)decrease;A

Question

Desired Level of the Capital Stock 
-Consider the two graphs above.Suppose producers forecast a decrease in sales.This would ________ the desired level of inventories,as depicted in graph ________.
A)increase;B 
B)increase;A 
C)decrease;B 
D)decrease;A

Quizplus · Accepted Answer

A decrease in sales would result in producers wanting to hold less inventory, hence decreasing the desired level of inventories as shown in graph A.