At the end of the year, 2,500 Ford Explorers are waiting to be delivered to dealerships. How is this overproduction accounted for in this year's GDP?
A) The cars are inventory, and their value will increase investment.
B) The cars are durable goods, and their value will increase consumption.
C) The cars are not counted toward this year's GDP; they will count toward next year's GDP when they are sold.
D) The cars are unsold inventory and they reduce the value of investment.

Question

Quizplus · Accepted Answer

The cars are considered inventory investment, which is a component of GDP. When goods are produced but not sold within the same year, their value is added to the GDP as an increase in inventory, which falls under investment.

At the End of the Year, 2,500 Ford Explorers Are