Suppose that GDP was $250 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $15 billion. GDP in year 2 is

$265 billion

Explanation:

The computation of the GDP in year 2 is shown below:

= GDP in year 1 + increase in the business inventories

= $250 billion + $15 billion

= $265 billion

We simply added the GDP in year 1 with the increase in the business inventories so that the GDP in year 2 could come

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