Assertion (A): If aggregate demand is greater than output, output will rise.
Reason (R): Firms meet the extra demand from stock, and the fall in their inventories signals them to produce more.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Unplanned fall in inventories → more production. R explains A.

Concept: Adjustment towards equilibrium
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsEquilibrium: AD equals output

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Assertion (A): If aggregate demand is greater than output, output will rise.Reason (R): Firms meet the extra demand from stock, and the fall in their inventories signals them to produce more.

Explanation

Assertion (A): If aggregate demand is greater than output, output will rise.
Reason (R): Firms meet the extra demand from stock, and the fall in their inventories signals them to produce more.