An increase in inventories will increase which component of gross domestic product?
Investment expenditures
An increase in inventories will increase the investment component of gross domestic product (GDP). Investment in GDP refers to the total spending on capital goods, such as machinery, equipment, and buildings, that are used to produce goods and services within a country’s borders. If there is an increase in inventories, this means that businesses are producing more goods than they are selling. Therefore, they are accumulating an excess of goods which are not being sold and adding to their inventory stock. This increase in inventories is treated as an investment, as it represents the purchase and holding of goods that will be sold in the future. Thus, it is added to the investment component of GDP.
More Answers:
Unlocking the Power of Coincident Economic Indicators for Business, Investment and Policy DecisionsWhy Banks Prefer to Avoid High Levels of Excess Reserves: A Cost of Holding Idle Funds.
Short-term Effects of Government Borrowing on Bond Yields and Inflation
Error 403 The request cannot be completed because you have exceeded your quota. : quotaExceeded