7 U.S. business inventories increaseBusiness inventories in the United States rose 0.4% in July after no change in the prior month. An increase in inveniories adte to gross domeste product while a decrease subtracts fromRSouror US. Depatment af Commerce. September 13, 2010Explain why an increase in inventories adds to gross domestic product but why it maters whether an inorease in inventones is planned or unplannedA planned increase in inventoriesOA shifts the AE curve downward, so firma decrease production and real GOP decreasesB. increases consumption expenditure, which increases equlibrium expenditure and reai GDPOc. shifts the AE curve upward, so frms decrease production and real GDP decreases to reach equilbrum axpandhureOD. decreases investment, which decreases equilibrium expenditure and real GOPOE increases investment, which increases equilibrium expenditure and real GDPAn unplanned increase in inventoriesO A. occurs when real GDP exceeds aggregate planned expendiure, so firma deorease production and real GDP decreasesB. increases investment, which increases equilibrium expenditure and real GDPOC. occurs when real GDP exceeds aggregate planned expendture, so firms increae production and real GDP incraasesOD. occurs when aggregate planned expendture exceeds real GDP. so fims increase production and real GDP increasesOE. occurs when aggregate planned expenditure exceeds real GDP so fims decrease production and real GOP decreases

GDP: It refers to the increase in the production of the economy. This increase in the production…

A planned increate in inventories OA shits the AE curve downward, so fima decrease production and real GOP decreases OR. increases consumption expendilue which inoreases erum ependiure and rea GOP Oc. shifts the AE curve upward, so firms decrease production and real GOP aecreases to reach equibrum ependiue OD. decreases investment, which decreases equilibrum expendture and real GOP OE increases investment, which increases equilbrum expenditure and real GDP

A planned increate in inventories OA shits the AE curve downward, so fima decrease production and real GOP decreases OR. increases consumption expendilue which inoreases erum ependiure and rea GOP Oc. shifts the AE curve upward, so firms decrease production and real GOP aecreases to reach equibrum ependiue OD. decreases investment, which decreases equilibrum expendture and real GOP OE increases investment, which increases equilbrum expenditure and real GDP

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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