In calculating GDP,how do national income accountants treat inventories?

Question

Quizplus · Accepted Answer

National income accountants treat inventories as a part of investment and not final consumption. Therefore, they do not include the value of inventories in GDP directly. Instead, they take the change in inventories over the accounting period and add it to or subtract it from GDP accordingly. An increase in inventories indicates that more goods were produced than sold during the period, which means that GDP should be lowered by that amount. Conversely, a decrease in inventories indicates that fewer goods were produced than sold, which means that GDP should be increased by that amount.

In Calculating GDP,how Do National Income Accountants Treat Inventories