Consider the two graphs above. Suppose producers forecast a decrease in sales. This would ________ the desired level of inventories, as depicted in graph ________.
A) increase; B
B) increase; A
C) decrease; B
D) decrease; A
Question 2
Which of the following is NOT a feature of recent U.S. business cycles?
A) The time series of deviations from trend in real GDP is quite choppy.
B) The time series of deviations from trend in real GDP is quite smooth.
C) There is no regularity to the amplitude of fluctuations in real GDP above trend.
D) There is no regularity to the frequency of fluctuations in real GDP above trend.
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