Adding to the stock of spare parts that a manufacturer keeps on hand to replace worn out or broken parts is an example of:
A) the efficient markets hypothesis.
B) precautionary saving.
C) inventory investment.
D) reserve requirements.

Question

Quizplus · Accepted Answer

The process of adding to the stock of spare parts is known as inventory investment. It involves holding a certain quantity of goods or raw material to meet future demand, and is necessary for businesses to prevent stockouts and ensure they are able to meet customer needs. Option A (efficient markets hypothesis) is unrelated to this concept, Option B (precautionary saving) refers to individuals saving money to protect against unexpected events such as job loss, illness or emergency expenses, and Option D (reserve requirements) refers to the regulations that require banks to keep a certain percentage of their deposits in reserve.

Adding to the Stock of Spare Parts That a Manufacturer