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Unformatted text preview: inventories (Iv) will start to fall. Managers notice the decline in their inventories, and realize they need to make adjustments to bring the system back into equilibrium If the economy is currently adjustments to bring the system back into equilibrium. If the economy is currently experiencing low unemployment and factories are operating near capacity, managers do not have many options in the short run. Managers will probably increase prices which may result in inflation. On the other hand, if unemployment was rather high and factories were operating at less than full capacity; then managers would probably choose to increase production by calling back laid off employees. What about the affects of this cut in taxes on the federal budget deficit 44 or surplus?...
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- Fall '10