New Question] Argument Based on the above soreenshot: I agree with your answer. I realized that investment in Economics means the inventory in Accounting. What I am not so clear about is when the firm sells the investment next year, the amount is added to consumption and deducted from inventory. My question is, what do we use to add to consumption - the selling price or the investment cost'? What do we remove from investment: the selling price or investment cost? This is a question related to the topic of GDP: Screenshot 20211020 105959jpg Answer from your tutor: Report this answer Q YobVelasch Answered 10 hours ago Investment in Economics is composed of new constructionl new durable capital equipment, and increase in stocks or inventories. Not only inventories, so they are not very much the same in Economics and Accounting. Investments have wider meaning in Economics. The selling price is the one used when the goods in the inventories last period is sold in the next period. This would reflect in consumption. The selling price is used as a basis as well when the inventories under investment will decrease as a result of being sold. Explanation: Remember that the values used in the calculation of GDP are the (selling) prices of the final goods and services in that period, not the cost such as inventory costs. Your question: Subject: Macroeconomics Course: ECON 1580 Consider the following scenario and determine whether it would be included in GDP, the category that it would affect, and the net change in GDP: You are a manufacturer, and you produce 1,000 units of a good and store it in your warehouse as inventory. Answer from your tutor: Report this answer lily118 Answered 1? hours ago Would be included in GDP? Yes, it would be included in GDP Category it would affect? It would affect the investment category Net change in GDP? Increase Explanation: Inventories that are produced in a certain period of time will be included in the GDP for that period, even if they have not yet sold. That's why the 1,000 units of a good produced by the manufacturer will be part of the GDP under the category of investment. This production will increase the GDP by the value of 1,000 units since these are new additional goods produced within the country. Thank you for your feedback _ _ _ Ask a new question We're glad that It was helpful! Keep your study momentum gomg