Changes in the stocks of finished goods and goods in process as well as changes in the raw materials that businesses keep on hand is known as

Question

Quizplus · Accepted Answer

Inventory investment refers to the changes in the stocks of finished goods, goods in process, and raw materials that businesses keep on hand. It is a component of overall investment in the national income accounts. The other options, expenditure approach and income approach, are methods of calculating national income and not related to inventory investment. Fixed investment refers to investment in physical assets such as machinery, equipment, and buildings.

Changes in the Stocks of Finished Goods and Goods in Process