If business inventories equal $20 billion at the beginning of the year but equal $30 billion at the end of the year,then GDP has
A) decreased by $10 billion.
B) increased by $10 billion.
C) increased by $20 billion.
D) increased by $30 billion.
E) not changed.

Question

Quizplus · Accepted Answer

The increase in business inventories from $20 billion to $30 billion represents an increase in investment, which contributes to GDP. Therefore, GDP has increased by $10 billion.

If Business Inventories Equal $20 Billion at the Beginning of the Year