Explore BrainMass

Explore BrainMass

    Multiplier: Replenishment of Business Inventories

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Using the Multiplier could you please explain how the replenishment of business inventories will affect the GDP so sharply?

    © BrainMass Inc. brainmass.com December 15, 2022, 4:48 pm ad1c9bdddf

    Solution Preview

    GDP generally is defined as the market value of the goods and services produced by a country. One way to calculate a nation's GDP is to sum all expenditures in the country. This method is known as the expenditure approach and is described below.
    Expenditure Approach to Calculating GDP

    The expenditure approach calculates GDP by summing the four possible types of expenditures as follows:
    GDP = Consumption
    + Investment
    + Government Purchases
    + ...

    Solution Summary

    This solution explains the concept of multiplier.