Does the inventory investment component of I in CIGNX measur

Does the inventory investment component of I in C+I+G+NX measure inventory or does it measure change in inventory?Explain

Solution

In this equation, I is investment As the expenditure rises , the income and output also rise. Thus, there is full employment as public demand grows with high investment, less consumption , more government expenditure and output We have

NX = C - I - G

But C+I +G= X

Hence

X= N

Where N = number of units of output

Hence with increase in units the ouput also increase with increase of investment and hence more capital.

Hence, I is the change in inventory

Hence proved

By,

Nishant Bhatt