What is happening at point C?
a. Consumers are preordering products.
b. Consumers have maxed out their credit.
c. Inventories are being sold off to meet demand.
d. Excess production is being stored in inventories.
d. Excess production is being stored in inventories.
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Refer to Figure 16-9. Given that the economy has moved from point A to point B in the graph above, which of the following would be the appropriate fiscal policy to achieve potential GDP?
A) decrease the money supply B) increase interest rates C) increase government spending D) increase taxes
If countries 1 and 2 produce only two goods, A and B, and they have the same opportunity cost for the production of good A (and thus good B), then
A) each country will specialize in the production of one good and engage in trade. B) neither country will specialize in the production of a good, but both will engage in trade. C) one country will specialize in the production of a good, and both will engage in trade. D) neither country will specialize in the production of a good, and there will be no incentive for trade.