Question

I'm learning about GDP and I'm looking at the 4 categories and I found this paragraph on investment spending confusing:

Spending to increase productivity or output in an economy. Investment spending includes the market value of the products that are built but not sold, what economists call changes in business inventories. When these products are sold, the difference between the inventory value and the selling price is added to or subtracted from GDP. If total output exceeds current sales, inventories that are a form of investment spending, build up. If businesses produce more goods (contd.)

Answer 1

than they sell, the unsold inventories will increase GDP. Increases in inventories usually (contd.) precede decreases in production as businesses cut back until inventories are sold. If businesses are able to sell more than they produce in a time period, inventories are drawn down and thus GDP decreases.

Answer 2

@Chooch146

Answer 3

This is too smart stuff for me lol sorry

Answer 4

Oh, lol thanks anyways

Answer 5

Which part don't you get @doulikepiecauseidont

Answer 6

?

Answer 7

Oh I understand it now

Answer 8

No worries :)