Between September 2009 and September 2010, the recovery of private inv

Between September 2009 and September 2010, the recovery of private inventories, as shown in Figure 19.1, was far stronger than the overall economy’s recovery from the Great Recession. Which is the most reasonable inference?

A) Persistently weak aggregate demand gave producers no alternative but to place current output into storage.
B) Businesses overestimated the strength of the recovery, which lead to overstocking of inventories.
C) Financial constraints had forced businesses to contract inventories by more than they otherwise would have chosen. The period beginning in September 2009 reflects the attempt by businesses to correct this.
D) Generally poor weather conditions in the final months of the year in the northern hemisphere make it less costly to store goods than to transport them to consumers.

ANSWER

C