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National Income Accounting — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsNational Income Accounting4 Marks
Question
What causes change in inventory stock?
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Answer

Change in inventory stock is caused by two factors:
  1. Unexpected fall in demand in the current year Producers have expected demand of 50,000 umbrellas but owing to the failure of monsoon, only 10,000 umbrellas are sold during a year. Accordingly, 40,000 umbrellas are added to the existing stock.
  2. Expected rise in demand in near future Producers may expect a spurt in demand (and therefore, increase in its price) in the near future. Accordingly, they pile up stocks during the current year.

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