8. In one year, a company increases its production by $20 million and increases sales by $18 million. Ceteris Paribus, w...

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8. In one year, a company increases its production by $20 million and increases sales by $18 million. Ceteris Paribus, w...

8. In one year, a company increases its production by $20 million and increases sales by $18 million. Ceteris Paribus, which of the following is true?

A) GDP increases by $ 18 million and inventory investment decreases by $2 million

B) GDP increases by $20 million and inventory investment increases by $2 million

C) GDP increases by $18 million and inventory investment equals $0

D) GDP increases by $18 million and inventory investment increases by $2 million

business economics

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Answer 1

Answer #1

GDP is the value of all final goods produced in a year but it does not include inventories.Inventories will be included in the GDP calculation of year in which it is sold out.

GDP increase for current year=$18 millions.

Inventory increase=2 millions.

Answer-D

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Answer 2

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