For the Following Question(s), Suppose an Economy Produces Only Pens

question 7

Multiple Choice

For the following question(s) , suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table:

-What is the real GDP in year 1 using base year 1?

• A) $418
• B) $300
• C) $360
• D) $338
• E) $294

---

Definitions:

Fiscal Year-End

Fiscal Year-End refers to the last day of a company's accounting period, which is used for financial reporting and tax purposes and can vary but often ends on December 31.

Accrual Basis

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash transaction occurs.

Form 1120

Form 1120 is the tax form used by corporations in the United States to report their income, gains, losses, deductions, and credits to the IRS.

Subchapter S Corporation

A form of corporation that meets specific Internal Revenue Code requirements, allowing profits to be passed directly to shareholders and avoid double taxation.