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4. Inventories are an important part of GDP. If a firm has depleted their inventories, they will need to replenish and order more goods, therefore
4. Inventories are an important part of GDP. If a firm has depleted their inventories, they will need to replenish and order more goods, therefore increasing production of these goods. And if inventories build up, it means this firm (or the economy as a whole) is not selling enough goods and will need to order less. This is not good for the economy. If inventories were to give the economy a boost, did inventories increase or decrease? Briefly explain your
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