In Calculating GDP as Income, Which of the Following Best

question 11

Multiple Choice

In calculating GDP as income, which of the following best describes what net investment is?

• A) A measure of how much new investment there is each year after depreciation is added
• B) A measure of how much new investment there is each year after depreciation has been subtracted
• C) A measure of how much new investment there is each year after the appropriate taxes and net exports are subtracted
• D) None of these is remotely related to a correct definition of net investment.

---

Definitions:

Leakage

In economics, the term refers to a situation where income or resources exit an economy or system rather than being retained or reinvested.

Circular Flow

Describes the continuous movement of goods, services, and money between households and businesses in an economy, illustrating how these entities interact in the markets for resources and products.

Gross Domestic Product

The total value of all goods and services produced within a country's borders in a specific time period, serving as a broad measure of economic activity.

Retail Store

A business establishment that sells goods or commodities directly to consumers.