firms in a small economy planned that inventories would grow over the past year by $500,000. over that year, inventories did grow by exactly $500,000. this implies that

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03-11-2021
Business

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firms in a small economy planned that inventories would grow over the past year by $500,000. over that year, inventories did grow by exactly $500,000. this implies that

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Baraqidn Baraqidn · Answer 1 · 2021-11-05T11:23:52-04:00

Given the situation described in the question, this implies that the firm's "aggregate expenditure that year equal to the GDP that year."

This is evident in the fact that the expected or estimated inventories sum equals the actual inventories sum.

Note business or firm's inventories are included when measuring the GDP.

This is because the unsold inventories of firms which is resulted from the firms producing more than they sell, increases GDP. While when firms sell Inventories more than they produce, it leads to a reduction in GDP.

Hence, in this case, it is concluded that the correct answer to the question is "aggregate expenditure that year equal to the GDP that year."

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