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Relationship between consumption expenditures and inventory

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September 10th, 2022

Since inventories are not a large component of GDP, how can they affect GDP so sharply? How will the replenishment cycle affect GDP in the near future?

I know that there is a relationship between consumption expenditures and inventories and that there is an interdependence, but I am not sure how to answer this. It most likely has something to do with the multiplier effect. Can you help me on this?

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