"Few If Any Economists Anticipated the Extent of the Inventory

question 368

Multiple Choice

"Few if any economists anticipated the extent of the inventory adjustment... Production cutbacks have been much greater than expected. Those cuts have weakened the industrial sector considerably." As a result of these changes, the U.S. government lowered its estimate of fourth-quarter growth in real GDP.
Www) businessweek.com 3/12/2007
The article suggests that ________.

• A) planned expenditures exceeded real GDP in 2006.
• B) real GDP exceeded planned expenditures in 2006.
• C) the AE curve shifted upward in 2007.
• D) the AD curve shifted rightward in 2007.

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Definitions:

Merchandise Inventory

Refers to the goods a company holds for the purpose of selling them to customers. It is considered a current asset on the balance sheet.

Budgeted Cost

This refers to the predicted costs of goods, services, projects, or operations that are planned for a future period.

Merchandise Purchases Budget

An estimate detailing the amount of goods a company plans to purchase over a certain period to meet its sales and inventory needs.

Selling Expenses Budget

A financial plan estimating the costs associated with promoting, selling, and distributing a product or service for a future period.