What happens when the total supply in the economy surpasses the total demand?

Multiple choice question for Basic of Economics. Select an option, then review the explanation below.

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Companies build up excess inventoryThere is a rise in unemploymentConsumer prices increaseHouseholds save more than planned

Explanation

When aggregate supply is greater than aggregate demand, businesses tend to accumulate unsold stock, leading to increased inventories. This situation can signal an imbalance in the market where production outpaces consumption.

Practice related questions from the same subject.

1.Which of the following best describes deflation?
2.Under what condition can two nations benefit from engaging in international trade?
3.Which of the following represents a legitimate form of currency?
4.Which political ideology is best summarized by the phrase, "From each according to his ability, to each according to his needs"?
5.Which type of currency experiences a decline in its exchange rate due to a continuous balance of payments deficit?

What happens when the total supply in the economy surpasses the total demand?

Explanation

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