Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

Investment can mean the amount a producer plans to add to his inventory, which may be different from what she ends up doing. Arrange the given case study considering this process of ex-ante to ex-post investment.

(A) At the end of the year, his inventory goes up by Rs 70 only
(B) Due to an unforeseen upsurge in demand for his goods in the market, the volume of sales exceeds
(C) The producer plans to add Rs 100 worth of goods to his stock by the end of the year, which is his planned investment
(D) To meet this extra demand, he has to sell goods worth Rs 30 from his stock

Choose the correct answer from the options given below:

Options:

(A), (B), (C), (D)

(B), (A), (C), (D)

(C), (B), (D), (A)

(B), (A), (D), (C)

Correct Answer:

(C), (B), (D), (A)

Explanation:

The correct answer is Option (3) → (C), (B), (D), (A)

Option (C): The process begins with the producer planning to add ₹100 worth of goods to his inventory. This is the ex-ante investment (planned investment).

Option (B): An unexpected rise in demand causes more goods to be sold than anticipated.

Option (D): To meet this increased demand, the producer sells ₹30 worth of goods from his stock, reducing what he could add to inventory.

Option (A): Finally, as a result of selling from stock, actual inventory increases by only ₹70. This is the ex-post investment (actual investment).

This sequence shows the shift from planned (ex-ante) investment to actual (ex-post) investment due to unexpected market conditions.