6. Goods added to inventories during a given year are a. counted as part of GDP

Question

6. Goods added to inventories during a given year are a. counted as part of GDP for that year even though they do not pass through markets b not counted as part of GDP for that year because they do not pass through markets c not counted as part of GDP for that year because that would amount to double counting, once the year they are produced and again the year they are sold d. arbitrarily valued at half the cost of production in calculating GDP for that year, since there is always a chance they will never be sold

Explanation / Answer

Option (a).

Addition to inventory is considered as gross private investment by private firms (businesses) and they are included in GDP under Gross Private Investment component.

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