-A build-up of unwanted inventories:
A) occurs when the consumers are saving more than businesses want to invest.
B) never occurs in a closed private economy.
C) indicates a lack of confidence by consumers.
D) will lead to higher income.

Question

-A build-up of unwanted inventories:
A) occurs when the consumers are saving more than businesses want to invest. 
B) never occurs in a closed private economy. 
C) indicates a lack of confidence by consumers. 
D) will lead to higher income.

Quizplus · Accepted Answer

A build-up of unwanted inventories occurs when consumers are saving more than businesses anticipated, leading to less consumption and more goods left unsold than expected. This situation reflects a discrepancy between what businesses expected to sell and what consumers are actually purchasing, not necessarily a lack of consumer confidence or a direct path to higher income.

-A Build-Up of Unwanted Inventories