Question

An increase in unplanned inventories is a sign of

A. falling consumer spending and a weakening economy.

B. rising actual investment spending and a growing economy.

C. rising consumer spending and a weakening economy.

D. falling actual investment spending and a weakening economy.

E. rising planned investment spending and a growing economy.

Answer 1

Ans is A

Unplanned inventories investment isnot good for a seller as well as for economy because When Seller invest in inventory based on how much seller think seller will be able to sell. Total investment in the business equals sellers investment in the buildings,equipment and inventory. Total investment is a combination of planned investment and unplanned investments. Or Total investment is also a xombination of fixed capital and inventory imvestment. Thus unolanned inventory imvestment is caused due to decreaae in consumer spemding and weakening of an economy and slow down begins