Business inventories increase when firms produce
A)more than they sell, and the inventory increase is added to GDP.
B)less than they sell, and the inventory increase is added to GDP.
C)more than they sell, and the inventory increase is subtracted from GDP.
D)less than they sell, and the inventory increase is subtracted from GDP.

Question

Quizplus · Accepted Answer

When firms produce more than they sell, the unsold goods are added to inventories, which is considered an investment and thus added to GDP.

Business Inventories Increase When Firms Produce