Given the GDP at the End of Both 2004 and 2005

question 105

Multiple Choice

Given the GDP at the end of both 2004 and 2005, the growth rate of GDP for 2005 is calculated as:

• A) (GDP₂₀₀₅ - GDP₂₀₀₄) divided by GDP₂₀₀₅ × 100.
• B) (GDP₂₀₀₄ - GDP₂₀₀₅) divided by GDP₂₀₀₅ × 100.
• C) (GDP₂₀₀₅ - GDP₂₀₀₄) divided by GDP₂₀₀₄ × 100.
• D) (GDP₂₀₀₄ - GDP₂₀₀₅) divided by GDP₂₀₀₄ × 100.

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Definitions:

Net Investment

The total amount spent on capital assets (like plant and equipment) minus depreciation, reflecting the actual increase in an entity's productive capacity.

Depreciation

The process of allocating the cost of tangible assets over their useful lives, reflecting the decrease in value of assets due to use, wear and tear, or obsolescence.

Implicit Cost

An indirect, non-payment expense represented by the opportunity cost of utilizing resources in a specific project instead of elsewhere.

Expected Profit Rate

The forecasted return on investment over a specific period, reflecting the potential profitability of a business endeavor.