-Refer to the above diagram for a private closed economy.Unplanned investment in inventories will:
A) occur at all levels of GDP in excess of $200.
B) occur at all levels of GDP in excess of $600.
C) occur at all levels of GDP below $600.
D) not occur because the economy is necessarily in equilibrium.

Question

-Refer to the above diagram for a private closed economy.Unplanned investment in inventories will:
A) occur at all levels of GDP in excess of $200. 
B) occur at all levels of GDP in excess of $600. 
C) occur at all levels of GDP below $600. 
D) not occur because the economy is necessarily in equilibrium.

Quizplus · Accepted Answer

Unplanned investment in inventories occurs when firms produce more than they sell. This will happen when GDP is below $600, as firms will be producing more than consumers are buying.

-Refer to the Above Diagram for a Private Closed Economy