Refer to the information provided in Figure 8.9 below to answer the questions that follow. Figure 8.9
-Refer to Figure 8.9. At aggregate output level $100 million, there is a
A) $75 million unplanned increase in inventories.
B) $75 million unplanned decrease in inventories.
C) $100 million decrease in inventories.
D) $100 million increase in inventories.

Question

Refer to the information provided in Figure 8.9 below to answer the questions that follow.  Figure 8.9
-Refer to Figure 8.9. At aggregate output level $100 million, there is a
A) $75 million unplanned increase in inventories. 
B) $75 million unplanned decrease in inventories. 
C) $100 million decrease in inventories. 
D) $100 million increase in inventories.

Quizplus · Accepted Answer

At aggregate output level $100 million, the planned expenditure is $175 million but the actual output produced is only $100 million. This means there is an unplanned decrease in inventories of $75 million (planned expenditure minus actual output). Therefore, the correct answer is B, $75 million unplanned decrease in inventories.

Refer to the Information Provided in Figure 8