Suppose that inventories are rising. We can expect that, in the future,
A) real GDP will likely increase
B) real GDP will likely decrease.
C) real GDP could increase or decrease, as its direction cannot be predicted based on inventories.
D) ﬁrms will raise prices of their goods and services.

Question

Quizplus · Accepted Answer

If inventories are rising, it indicates that firms are producing more goods than are being sold. As a result, they will likely decrease production in the future, which will result in a decrease in real GDP.

Suppose That Inventories Are Rising