The Total Investment That Occurs in the Economy Is Called

question 24

Multiple Choice

The total investment that occurs in the economy is called gross investment.When calculating GDP using the expenditure approach,the gross investment component (I_a) is equivalent to

• A)net investment only.
• B)net investment minus depreciation.
• C)gross investment plus depreciation.
• D)net investment plus depreciation.
• E)fixed investment minus depreciation.

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Definitions:

Mutually Exclusive

This term refers to scenarios or choices where the selection of one option inherently prevents the choice of another.

Discount Rate

The interest rate the Federal Reserve charges commercial banks for short-term loans, or a rate used to discount future cash flows to their present value.

IRR Method

The Internal Rate of Return method, a capital budgeting technique that calculates the rate of return at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.