-Use the figure above to answer this question. At a price level of 110
A) real GDP is greater than the aggregate quantity demanded and firms will cut production.
B) real GDP is less than the aggregate quantity demanded and firms will increase production.
C) inventories will decrease.
D) real GDP less than the aggregate quantity demanded and firms will increase prices.

Question

-Use the figure above to answer this question. At a price level of 110
A) real GDP is greater than the aggregate quantity demanded and firms will cut production. 
B) real GDP is less than the aggregate quantity demanded and firms will increase production. 
C) inventories will decrease. 
D) real GDP less than the aggregate quantity demanded and firms will increase prices.

Quizplus · Accepted Answer

At a price level of 110, if real GDP is greater than the aggregate quantity demanded, it means that the supply exceeds demand. Consequently, firms will likely cut production to adjust for the lower demand to avoid excess inventory.

-Use the Figure Above to Answer This Question