In Response to Changing Inventories in Figure 9

question 51

Multiple Choice

In response to changing inventories in Figure 9.8,if the economy produces at full employment of $400 billion,firms will attempt to

• A)Lower production rates and hire more workers.
• B)Lower production rates and lay off workers.
• C)Raise production rates and hire more workers.
• D)Raise production rates and lay off workers.

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Definitions:

Revealed Preference

A theory that assumes individuals' preferences can be determined by their purchasing habits.

Weak Axiom

A principle in consumer choice theory stating that if a consumer prefers bundle A over bundle B when both are available at the same prices, then the consumer will not purchase more of bundle B if its price rises.

Revealed Preference

An economic theory stating that the preferences of consumers can be understood by their purchasing habits.

Prices

The monetary value assigned to goods and services in a market, dictating the exchange rate at which these can be traded.