If a toy store overestimates the demand for a toy in 2004 and,as a result,has an unexpectedly large number of toys in stock at the end of the year,the value of the inventory of these toys will be considered as:
A)investment in 2004.
B)investment in 2005.
C)consumption in 2004.
D)consumption in 2005.
E)a part of GDP when the toys are sold.

Question

Quizplus · Accepted Answer

The value of the inventory of toys that were overestimated and remained unsold at the end of 2004 would be considered as investment in 2004. This is because inventory investment is counted in the year the goods are produced, not when they are sold.

If a Toy Store Overestimates the Demand for a Toy