Over Time in the Long Run We Expect Unplanned Inventory

question 27

Multiple Choice

Over time in the long run we expect unplanned inventory expenditure to:

• A) equal zero as planned inventories should equal actual inventories.
• B) increase because firms have a hard time figuring out what consumers want.
• C) be negative as firms will tend to reduce production is they think people won't purchase their product.
• D) be positive as on average firms tend to be optimistic about sales, but if they don't sell product they store it.

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Definitions:

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