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Refer to the information provided in Figure 8.10 below to answer the questions that follow.

Aggregate expenditures ($ millions) 1,000 +---- 1 600 -- 200 45 500 1,000 1,200 Aggregate output ($ millions)

Figure 8.10


1) Refer to Figure 8.10. At an aggregate output level of $500 million, there is a

a) $100 million unplanned increase in inventories.

b) $175 million unplanned decrease in inventories.

c) $0 change in unplanned inventories.

d) $100 million unplanned decrease in inventories.



2) Refer to Figure 8.10. At aggregate output levels above $1,000 million, there are

a) unplanned decreases in inventories and output increases.

b) unplanned increases in inventories and output increases.

c) unplanned decreases in inventories and output decreases.

d) unplanned increases in inventories and output decreases.



3) Refer to Figure 8.10. At aggregate output levels below $1,000 million, there are

a) unplanned decreases in inventories and output increases.

b) unplanned increases in inventories and output increases.

c) unplanned increases in inventories and output decreases.

d) unplanned decreases in inventories and output decreases.

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Answer #1

Answer-1 The correct option is d) $100 million unplanned decrease in inventories.

Answer-2 The correct option is d) unplanned increases in inventories and output decreases.

Answer-3 The correct option is a) unplanned decreases in inventories and output increases.

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