CHANGE IN BUSINESS INVENTORIES: The increase or decrease in the stocks of final goods, intermediate goods, raw materials, and other inputs that businesses keep on hand to use in production. This is one of two main categories of gross private domestic investment included in the National Income and Product Accounts maintained by the Bureau of Economic Analysis. The other category is fixed investment. Change in business inventories is NOT what most people think of when the topic of business investment arises. Inventory changes are considered investment because firms need inventories to smooth the flow of production and sales just like they need factories and equipment to produce goods. In fact, inventories are frequently termed "working capital."

     See also | final good | intermediate good | raw materials | input | business | gross private domestic investment | National Income and Product Accounts | Bureau of Economic Analysis | fixed investment | production | business cycle | economic indicators |

CHANGE IN BUSINESS INVENTORIES, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: February 8, 2023].

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The distribution or allocation of a limited commodity using markets and prices. Rationing is needed due to the scarcity problem. Because wants and needs are unlimited, but resources are limited, available commodities must be rationed out to competing uses. Markets ration commodities by limiting the purchase only to those buyers willing and able to pay the price.

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