Figure 4-5
-In the figure above, at what income would the interest rate that brings about money market equilibrium cause unwanted inventories of commodities to accumulate?
A) YA
B) YB
C) YE
D) YC

Question

Figure 4-5 
-In the figure above, at what income would the interest rate that brings about money market equilibrium cause unwanted inventories of commodities to accumulate?
A) YA 
B) YB 
C) YE 
D) YC

Quizplus · Accepted Answer

At income level YC, the interest rate is too high, leading to reduced investment and consumption, causing aggregate demand to fall short of aggregate supply, resulting in unwanted inventories.

Figure 4-5 -In the Figure Above, at What Income Would the Interest