In a purely private economy,the difference between actual investment and desired investment measures the undesired change in inventory.
If actual investment exceeds desired investment,inventory levels are increasing to undesirable levels; and when actual investment is less than desired investment,inventory levels are decreasing to undesirable levels.

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Quizplus · Accepted Answer

This statement accurately reflects how the relationship between actual and desired investment affects inventory levels in a private economy. If actual investment exceeds desired investment, it means firms are producing more goods than consumers actually want to buy, leading to an increase in inventory levels that may eventually result in price cuts or surplus accumulation. Conversely, if actual investment falls short of desired investment, firms are not producing enough to meet the demands of consumers, which may lead to shortages or price increases. Thus, the difference between actual and desired investment is an important determinant of inventory levels in a private economy.

In a Purely Private Economy,the Difference Between Actual Investment and Desired