For Monitoring Fluctuations in the National Economy,which Measure of Income

question 65

Multiple Choice

For monitoring fluctuations in the national economy,which measure of income is best?

• A)GDP
• B)GNP
• C)NNP
• D)It does not matter very much which measure we use.

---

Definitions:

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Absorption Costing

A costing method that includes all manufacturing costs (both fixed and variable) in the cost of a product.

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenue.

Variable Costing

An accounting method that considers only variable costs in calculating the cost of goods sold and determines contribution margin.