Which of the Following Would Not Lead to a Build

question 95

Multiple Choice

Which of the following would not lead to a build up inventory as a strategy to increase operating income?

• A) Cutting overhead costs as year-end approaches.
• B) Plant manager switching to make products that absorb the highest amounts of fixed cists
• C) Plant manager accepting an order to increase production and build up inventory when another plant in the same company would be better suited to take on the order
• D) Allocating resources to production by deferring maintenance of equipment and building beyond the current period

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Definitions:

Crowding Out

A phenomenon where increased government spending leads to a reduction in private sector investment due to higher interest rates.

Increase Taxes

Refers to a government's decision to raise the percentage of compulsory contributions on personal or corporate income, goods, services, or transactions, often aimed at financing government expenses.

Lower Interest Rates

A monetary policy strategy where central banks reduce the cost of borrowing money in an effort to stimulate economic growth.

Crowding Out

A situation in which increased government spending leads to a reduction in private sector spending and investment.