When Calculating GDP from the Expenditure Side,which of the Following

question 49

Multiple Choice

When calculating GDP from the expenditure side,which of the following is true of the government purchases component,G_a?

• A)It includes government subsidies to private firms.
• B)It is based on the government's planned spending.
• C)It includes employment insurance and employment benefits.
• D)It excludes transfer payments.
• E)It only includes federal government expenditures.

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Definitions:

Market Value

The current exchange rate for acquiring or disposing of a service or asset.

Bond Issue

A financial instrument issued by a corporation or government as a way of borrowing money, where the issuer promises to pay back the face value on a specific date, along with periodic interest payments.

Weighted Average Cost of Capital (WACC)

A calculation of a firm's cost of capital, weighted by the proportion of each component of capital, including debt and equity.

Cost of Debt

The effective rate that a company pays on its current debt, often reflected as an annual rate.