Pad 4:00 ezto mheducation.com Chapter 7 MC Quiz instructions help Question 7 (of
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Pad 4:00 ezto mheducation.com Chapter 7 MC Quiz instructions help Question 7 (of 15) Save & Exit Submit 7 Suppose car companies produced a lot of cars this year but decided to hold the new models back in warehouses until next year so that the new cars could be released in a new-model year This year's GDP will be: O the same whether or not the cars are sold right away. lower unless the cars are sold right away the same unless the cars are sold right away O higher if the cars are sold right away. The choice to reserve the cars for a year: changes the expenditure category from consumption to investment Ochanges the expenditure category from consumption to inventories O does not change the expenditure category. changes the expenditure category from investment to consumption.
Explanation / Answer
1> a
Reason
Increases in business inventories are counted in the calculation of GDP so that new goods that are produced but go unsold are still counted in the year in which they are produced.
2> a
Reason
It will be counted as an investment as it is not part of consumption yet.
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