Firms react to unplanned inventory reductions by
A) reducing output.
B) increasing output.
C) reducing planned investment.
D) increasing consumption.

Question

Quizplus · Accepted Answer

When firms experience unplanned inventory reductions, it typically means that their products are selling faster than anticipated. To replenish their inventory levels and meet the higher-than-expected demand, firms are likely to increase their output.

Firms React to Unplanned Inventory Reductions by