Holding Other Expenditures Constant, If Imports Fall by $20 Billion

question 5

Multiple Choice

Holding other expenditures constant, if imports fall by $20 billion and exports fall by $10 billion, then GDP

• A) rises by $10 billion.
• B) falls by $10 billion.
• C) falls by $30 billion.
• D) rises by $30 billion.

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Definitions:

Perpetual Inventory Method

An inventory management technique where updates to inventory records are made immediately following each transaction, giving real-time inventory levels.

Journalize

The process of recording business transactions in the accounting journals as part of the double-entry bookkeeping system.

Terms 2/10, N/30

Payment terms indicating a 2% discount is available if paid within 10 days; otherwise, the full (net) amount is due in 30 days.

Merchandise

Goods that are bought and sold by businesses in the ordinary course of commerce.