Refer to the information provided in Table 8.5 below to answer the questions that follow.
Table 8.5

-Refer to Table 8.5.At an aggregate output level of $4,000 million,the unplanned inventory change is
A)$1,200 million.
B)$400 million.
C)$0.
D)-$400 million.

Question

Refer to the information provided in Table 8.5 below to answer the questions that follow.
Table 8.5
 
-Refer to Table 8.5.At an aggregate output level of $4,000 million,the unplanned inventory change is
A)$1,200 million. 
B)$400 million. 
C)$0. 
D)-$400 million.

Quizplus · Accepted Answer

At an aggregate output level of $4,000 million, the actual output level is higher than the equilibrium output level of $3,600 million which means that firms are producing more than what is demanded resulting in unplanned inventories. The unplanned inventory change is the difference between actual investment and planned investment which is -$400 million ($4,200 million - $3,800 million = -$400 million). Therefore, the correct answer is D.

Refer to the Information Provided in Table 8