Question
When the news of Wednesday's numbers on GDP was made public, stocks and bonds immediately rose and the U.S. dollar strengthened. Then, when analysis of
"When the news of Wednesday's numbers on GDP was made public, stocks and
bonds immediately rose and the U.S. dollar strengthened. Then, when analysis of
the numbers came in, the markets went into reverse. The reason was that the
greater part of the improvement in the quarter--$33.7 billion out of a total GDP
advance of $39.2 billion--came from additions to business inventories." Markets
went into reverse upon learning about the additions to inventories because it
suggested that:
a) output had risen, raising inflation fears
b) output had fallen, raising unemployment fears
c) aggregate demand had risen, raising inflation fears
d) aggregate demand had fallen, raising unemployment fears
Question: why increase in business inventories decrease AD.
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