Money illusion a. occurs when the Federal Reserve reduces the money supply, and is the misperception that prices have changed. b. occurs when output rises, and is the misconception that the price level is higher. c. is the distinguishing factor between the short run and the long run. d. is the misperception that one is wealthier when one's nominal income rises due to an increase in the price level.

Haley photocopying purchases a paper from an out-of-state vendor. average weekly demand for paper is 150 cartons per week for which haley pays $15 per carton. in bound shipments from the vendor average 1000 cartoons with an average lead time of 3 weeks. haley operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. the vendor has recently announced that they will be building a faculty near haley photocopying that will reduce lead time to one week. further, they will be able to reduce shipments to 200 cartons. haley believes that they will be able to reduce safety stock to a 1-week supply. what impact will these changes make to haley’s average inventory level and its average aggregated inventory value?