How are unsold final goods included in the calculation of NNP?
Answer and explanation
Correct answer: They are treated as inventory investment
Unsold final goods are not excluded from current production merely because they have not yet been purchased by consumers. They remain in the producer’s stock and are recorded as inventory investment, a component of gross investment. Including them ensures that the value of goods produced during the current period is counted in national income. Therefore, option A is correct.
Frequently asked questions
What is the correct answer to this question?
They are treated as inventory investment
Why is this the correct answer?
Unsold final goods are not excluded from current production merely because they have not yet been purchased by consumers. They remain in the producer’s stock and are recorded as inventory investment, a component of gross investment. Including them ensures that the value of goods produced during the current period is counted in national income. Therefore, option A is correct.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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