Answer to Question #268765 in Economics for megan

Question

 If desired investment exceeds actual investment, then…

a) The economy is in a recession.

b) Inventories are less than the desired level.

c) Inventories are accumulating beyond the desired levels.

d) Cyclical unemployment exists. 

Answer 1

b) Inventories are less than the desired level

Because the aggregate supply curve rises more steeply as the economy approaches full employment: Inflation tends to accelerate.