If Business Inventories Equal $40 Billion at the Beginning of the Year

question 119

Multiple Choice

If business inventories equal $40 billion at the beginning of the year and $55 billion at the end of the year, then, assuming no other changes, GDP must have:

• A)decreased by $15 billion.
• B)increased by $15 billion.
• C)increased by $40 billion.
• D)increased by $55 billion.

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Definitions:

Sales Returns

Goods returned to the seller by the buyer after the sale, leading to a reduction in sales revenue.

Discount Period

The timeframe within which a buyer can make payment less a discount for early settlement, encouraging quicker payment from customers.

Operating Expense Section

A part of the income statement that lists expenses related to the day-to-day operations of a business, excluding the cost of goods sold.

Wholesaler

An intermediary entity in the distribution channel that buys goods in bulk from manufacturers and sells them to retailers or other businesses, but not directly to consumers.