For a Given Level of GDP, an Increase in Depreciation

question 13

Multiple Choice

For a given level of GDP, an increase in depreciation will

• A) increase gross domestic product.
• B) reduce net national product.
• C) not affect disposable personal income.
• D) increase savings and reduce consumption expenditures.

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Definitions:

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditure to the appropriate years.

Permanent Accounts

Accounts that carry their balances over into the next accounting period, including assets, liabilities, and equity accounts.

Trial Balance

A financial worksheet that consolidates all ledger balances into equal debit and credit column totals.

Prepaid Items

This term describes expenses paid in advance for goods or services to be received in the future, such as insurance or rent.