A U.S.firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory.In the second quarter of 2010 the firm sells the sweatshirts to consumers.In which quarter(s)does(do)these transactions raise consumption?

Question

Quizplus · Accepted Answer

Consumption is the purchase of goods and services by households. In this scenario, the sale of sweatshirts to consumers in the second quarter of 2010 raises consumption. The production and transfer of the sweatshirts to inventory in the first quarter of 2010 do not count as consumption. Therefore, the transaction in the second quarter raises consumption but not the one in the first quarter. Choice C states that the second quarter but not the first raises consumption, making it the best answer.

A USfirm Produces Sweatshirts in the First Quarter of 2010 and and Adds