If a firm produces more output than it sells, there will be I. An increase in the firm's inventories
II) An increase in the gross private investment of the nation
A) I only
B) II only
C) Both I and II
D) Neither I nor II

Question

Quizplus · Accepted Answer

When a firm produces more output than it sells, its unsold goods are added to its inventories, which is considered an increase in the firm's inventories. Additionally, increases in inventories are counted as part of gross private investment in national accounting, thus both statements are correct.

If a Firm Produces More Output Than It Sells, There