If inventories increase in a given year, they should be added in when calculating GDP.

Name: If inventories increase in a given year, they should be added in when calculating GDP.
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Question

Quizplus · Accepted Answer

Inventories are considered a part of investment spending in GDP accounting. An increase in inventories means that businesses have produced more goods than they have sold, which means that they have invested in producing these goods. Thus, the value of the inventories should be added to the calculation of GDP.

If Inventories Increase in a Given Year, They Should Be