-In the Above Figure, If Real GDP Is Below $12

question 439

Multiple Choice

-In the above figure, if real GDP is below $12 trillion, inventories will be

• A) below target levels, so firms increase production.
• B) above target levels, so firms increase production.
• C) above target levels, so firms decrease production.
• D) below target levels, so firms decrease production.

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Definitions:

Producer Surplus

The divergence between the price at which sellers are ready to offer a good or service and the price they actually obtain.

Economic Efficiency

A state in which resources are allocated in a way that maximizes the total benefit received by society from those resources.

Consumer Surplus

The divergence between the price consumers are willing to pay and what they really spend on a good or service.

Floor Price

The minimum price set by regulation, often by the government, below which a commodity cannot legally be sold in the market.