During the Third Quarter of This Year a Firm Produces

question 23

Multiple Choice

During the third quarter of this year a firm produces consumer goods and adds some of those goods to its inventory. During the fourth quarter of this year, the firm sells the goods at a retail outlet, with the result that the value of its inventory at the end of the fourth quarter is smaller than the value of its inventory at the end of the third quarter. These actions affect which components) of fourth-quarter GDP?

• A) they increase consumption and have no effect on investment
• B) they increase consumption and decrease investment
• C) they have no effect on either consumption or investment
• D) they have no effect on consumption and decrease investment

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Definitions:

Free Recall

The process of retrieving information without the use of cues or prompts, in any order.

Recognition

The cognitive process of identifying information as being familiar, such as objects, situations, or people.

Savings

A concept in psychology referring to the amount of time or effort saved in relearning material compared to the initial learning.

Implicit Memories

Implicit memories are memories that influence our behavior and knowledge without conscious awareness.