Actual investment will be larger than planned investment if there is an unintended inventory accumulation.

Question

Quizplus · Accepted Answer

If there is an unintended inventory accumulation, it means that goods are not being sold as quickly as anticipated. This suggests that businesses are producing more than is being demanded, leading to excess inventory. To correct this, businesses may need to decrease production or increase sales. However, in the short term, businesses may have already invested in additional production capacity or inventory, leading to actual investment being larger than planned investment.

Actual Investment Will Be Larger Than Planned Investment If There