In an economy, the value of inventories was $75 billion in 2009 and $63 billion in 2010. In calculating total investment for 2010, national income accountants would:
A) Decrease it by $75 billion
B) Increase it by $63 billion
C) Decrease it by $12 billion
D) Increase it by $138 billion

Question

Quizplus · Accepted Answer

Total investment is the sum of all investments made within an economy in a given year. It includes fixed investment (e.g. new factories, equipment, and housing) as well as changes in inventory levels. Since inventory levels decreased from $75 billion in 2009 to $63 billion in 2010, this represents a decrease in investment of $12 billion. Therefore, national income accountants would decrease the total investment figure for 2010 by $12 billion.

In an Economy, the Value of Inventories Was $75 Billion