Question

The value of goods added to a firms inventory in a certain year is treated as Select one: a. spending on durable goods, since the goods could not be inventoried unless they were durable. b. intermediate goods, and so is not included in that year’s GDP. c. consumption, since the goods will be sold to consumers in another period. d. investment, since GDP aims to measure the value of the economys production that year.

Answer 1

Correct option is (d)

Step-by-step explanation:

GDP or Gross Domestic Product is the total value of goods and services produced during the year within the national boundaries.

It includes value of goods produced but not sold in the current year that is added to the inventory in the same year. Only value of goods produced in the current year added to inventory is considered in current year GDP otherwise it would lead to double counting.