Real gross domestic product (GDP) rose in the fourth quarter, led by exports. Consumer spending also increased. Business investment in plant and equipment expanded for the fourth consecutive quarter. Businesses reduced inventories by $5 billion after strong build-ups in the two previous quarters.
Explain why business inventories fall when real GDP rises. Of the expenditure items referred to in the news clip, which were a cause of the rise in real GDP and which were effects? Explain your answer with a diagram.