Suppose That in 2010, Firms Discover That Their Inventories Are

question 253

Multiple Choice

Suppose that in 2010, firms discover that their inventories are falling below their target levels. Which of the following statements is correct?

• A) The level of aggregate savings must equal the level of desired investment.
• B) Real GDP is less than equilibrium expenditure.
• C) Even though firms are trying, they are unable to maximize profits.
• D) Aggregate demand is less than aggregate supply.

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Definitions:

Hyperventilates

The condition of breathing at an abnormally rapid rate, leading to excessive loss of carbon dioxide.

Trachea

The windpipe; a tube that connects the pharynx and larynx to the lungs, allowing the passage of air.

Epiglottis

Structure that covers the glottis, the air-tract opening, during the process of swallowing.

Bronchioles

The small passages in the lungs that lead from the bronchi to the alveoli, involved in the process of breathing.