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When aggregated supply exceeds aggregate demand                    
  • a)
    unemployment falls    
  • b)
    prices rise    
  • c)
    inventories accumulate    
  • d)
    unemployment develops
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
When aggregated supply exceeds aggregate demand a)unemployment fal...
When aggregate supply is more than aggregate demand or when investment is less than savings, then the planned inventory rises above the desired level. To clear the unwanted increase in inventory, firms plan to reduce the production output till Aggregate demand becomes equal to Aggregate supply.
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When aggregated supply exceeds aggregate demand a)unemployment falls b)prices rise c)inventories accumulate d)unemployment developsCorrect answer is option 'C'. Can you explain this answer?
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