Which of the Following Statements Is True

question 127

Multiple Choice

Which of the following statements is true?

• A)Most conditional forecasts assume that a change in government purchases has no effect on the other spending components of real GDP.
• B)Only consumption spending is affected by changes in government purchases.
• C)A change in government purchases has no effect on the other spending components of real GDP.
• D)Consumption, investment, and net export spending are all likely to change as a result of a change in government purchases.
• E)An increase in government purchases by $10 million will cause real GDP to increase by exactly $10 million.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of the business, whichever is longer.

Minimum Required Rate Of Return

The lowest expected return on an investment deemed acceptable by an investor or manager, based on the level of risk and alternative opportunities.

Average Operating Assets

The average value of assets utilized in a business's operations, calculated over a specific period to assess performance.

Operating Expenses

Costs associated with the day-to-day operations of a business, such as rent, utilities, and payroll, excluding the cost of goods sold.