When a Firm Produces Consumer Goods and Adds Some to Inventory

question 1

Multiple Choice

When a firm produces consumer goods and adds some to inventory rather than selling it, how is the increase in inventory counted in GDP?

• A)It is not counted in the current quarter GDP.
• B)It is counted in the current quarter GDP as investment.
• C)It is counted in the current quarter GDP as consumption.
• D)It is counted in the current quarter GDP as a statistical discrepancy.

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Definitions:

Operations Management

The field of management concerned with overseeing, designing, and controlling the process of production and redesigning business operations.

Just-In-Time Performance

A strategy focusing on minimizing inventory and producing goods exactly when needed to meet demand, aiming for efficiency and waste reduction.

Mass Customization

An approach to manufacturing that combines the flexibility and personalization of custom-made products with the low unit costs associated with mass production.

Tax Losses

Financial losses that can be offset against other gains or income for tax purposes, potentially reducing the overall tax liability.