An increase in inventories during 2022:
A)will result in gross investment being higher than net investment by the amount of the inventory increase.
B)should be ignored while calculating GDP for 2022.
C)should be subtracted from GDP calculated for 2022.
D)should be included in GDP calculated for 2022.

Question

Quizplus · Accepted Answer

An increase in inventories should be included in GDP calculated for 2022 as it represents goods produced but not yet sold. These goods will be counted in GDP when they are eventually sold. Therefore, it should not be ignored or subtracted from GDP. It should also not result in gross investment being higher than net investment as gross investment includes all investment in new capital goods, and the increase in inventories is not a new capital good.

An Increase in Inventories During 2022