An example of an increase in gross private domestic investment spending that also increases GDP is when
A)a family sells its home because of a transfer.
B)a farmer buys a used tractor.
C)inventories of new cars accumulate on the lots of car dealers.
D)government increases spending on infrastructure.

Question

Quizplus · Accepted Answer

An increase in inventories, such as new cars accumulating on dealers' lots, is considered an investment in GDP calculations. This reflects production that has occurred but hasn't yet been sold, thus increasing GDP.

An Example of an Increase in Gross Private Domestic Investment