Consumption Spending Is $4

question 87

Multiple Choice

Consumption spending is $4.5 billion,gross private domestic investment is $3 billion,and government purchases are $2 billion.If GDP is $14 billion,which of the following could be true regarding exports and imports in the economy?

• A)Exports are $4.5 billion,and imports are $2 billion.
• B)Exports are $6 billion,and imports are $8.5 billion.
• C)Exports are $9 billion,and imports are $6 billion.
• D)Exports are $15 billion,and imports are $10.5 billion.

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, particularly concerning liquidity.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.

Payback Period

The length of time required to recover the cost of an investment.

IRR

The rate at which the projected cash flows of an investment will yield a net present value of zero, used as a measure to assess the profitability of investments.