A business produced $10 million of goods in 2010 but sold only $9 million. Is the $1 million increase in inventory counted as part of the 2010 gross domestic product?
A) No, because inventories are intermediate goods.
B) No, because if these inventories were sold in 2011, they would be counted twice.
C) Yes, because these inventories are part of the output of the economy in 2010.
D) Yes, but they will be added to the 2010 GDP only if they are sold in 2011.

Question

Quizplus · Accepted Answer

Inventories are considered part of the output of the economy in the year they are produced. Therefore, the $1 million increase in inventory should be counted towards the 2010 gross domestic product.

A Business Produced $10 Million of Goods in 2010 but Sold