In the National Income Accounts, Net Interest Is the Total

question 295

Multiple Choice

In the national income accounts, net interest is the total interest payments received by households on loans made by them minus

• A) interest payments made by households on their own borrowing.
• B) interest received from householdsʹ ownership of government bonds.
• C) taxes paid by households on their interest income.
• D) interest payments made by households to foreign lenders.

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Definitions:

Present Value

The contemporary valuation of a future sum of money or sequence of cash inflows, considering a certain rate of return.

Cost of Capital

The required return necessary to make a capital budgeting project, such as building a new factory, worthwhile.

Net Investment

The total amount spent on purchasing new capital assets minus depreciation on existing assets, indicating the actual increase in a company's capital stock.

Cash Operating Costs

Expenses directly related to the daily operational activities of a business, excluding financing costs and taxes.