An unexpected increase in inventories has
A) no effect on future production.
B) a positive effect on future production.
C) a negative effect on current production.
D) a negative effect on future production.

Question

Quizplus · Accepted Answer

An unexpected increase in inventories indicates that current production has exceeded demand, which means that future production will need to slow down in order to clear out the excess inventory. This implies that there will be a negative effect on future production.

An Unexpected Increase in Inventories Has