Adjustments for business inventory of product or inputs that are accumulated or sold during a year helps to ensure the accuracy of GDP by ensuring that GDP:
A) reflects the current cost of production as the measure of the value of a product.
B) does not include intermediate goods or capital investments.
C) includes all of the time period's production.
D) eliminates double counting when products are imported.

Question

Quizplus · Accepted Answer

Adjustments for business inventory ensure that GDP accurately reflects all of a time period's production, regardless of whether the products were sold within that period. This is because GDP aims to measure the total value of all goods and services produced over a specific time period, and inventory adjustments account for products that were produced but not sold, ensuring they are included in the GDP calculation for the period in which they were produced.

Adjustments for Business Inventory of Product or Inputs That Are