If firms' inventories are increasing above their target level, then
A) actual consumption expenditure is greater than planned consumption expenditure.
B) actual investment exceeds planned investment.
C) real GDP will increase.
D) real GDP will not change in the foreseeable future.

Question

Quizplus · Accepted Answer

When inventories increase above the target level, it indicates that actual investment (which includes changes in inventories) exceeds planned investment, as firms are producing more than what is being consumed or sold.

If Firms' Inventories Are Increasing Above Their Target Level, Then