A Country Reports That Unplanned Inventories Increased During 2014

question 8

Multiple Choice

A country reports that unplanned inventories increased during 2014. The increase in unplanned inventories leads to

• A) consumers increasing their consumption expenditure, which increases GDP.
• B) firms decreasing production, which decreases GDP.
• C) firms increasing production, which increases GDP.
• D) actual aggregate expenditure being different than real GDP.
• E) the government decreasing production, which decreases GDP.

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Definitions:

Earnings Per Share

A company’s net income divided by the number of its outstanding shares, indicating the portion of a company’s profit allocated to each outstanding share of common stock.

Common-size Statement

A financial statement in which all line items are expressed as a percentage of a base figure within the statement, facilitating comparison across different periods or companies.

Liability Accounts

Accounts on a company's balance sheet that represent the company's obligations to others, including loans, accounts payable, mortgages, and accrued expenses.

Total Assets

The sum of all assets owned by a company, including cash, inventory, property, and equipment, reflected on the balance sheet.