State the meaning of unintended accumulation of inventories.

State the meaning of ‘unintended accumulation of inventories.

Ans. The “unintended accumulation of inventories” refers to a situation where businesses end up holding more inventories than they initially planned or desired. This accumulation occurs when the level of production exceeds the level of demand for goods and services in the economy. It often indicates an imbalance between aggregate supply and aggregate demand, leading to excess inventories, which can be a signal of overproduction relative to consumer demand.