When a Firm Sells a Product Out of Inventory, GDP

question 33

Multiple Choice

When a firm sells a product out of inventory, GDP:

• A) increases.
• B) decreases.
• C) is not changed.
• D) increases or decreases, depending on the year the product was produced.

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Definitions:

Trade

The exchange of goods, services, or both within or between countries.

Invisible Hand

A metaphor for the self-regulating nature of the marketplace that guides individuals to unintentionally benefit society through the pursuit of their own interests.

Adam Smith

An 18th-century Scottish economist and philosopher best known for his theories on free market economies and the invisible hand concept.

The Wealth of Nations

A seminal book by Adam Smith, regarded as the foundation of modern economic theory, which analyzes the nature and causes of the wealth of nations.