One Reason the Total Sum of the Income Categories Does

question 106

Multiple Choice

One reason the total sum of the income categories does not equal GDP is that

• A)taxes are generally larger than subsidies and the depreciation of capital is negligible.
• B)people do not spend all their income, so the value of consumption expenditure is less than the value of wages.
• C)GDP values goods and services at market prices and the income approach values them at factor cost.
• D)GDP values goods and services at retail prices and the income approach values them at wholesale cost.
• E)GDP does not include depreciation, which is part of the income categories.

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Definitions:

Yield to Maturity

The expected overall yield of a bond, assuming it is retained until its maturity date, comprising of both interest earnings and profits from capital appreciation.

Coupon Rate

Yearly interest percentage on a bond, calculated against its nominal value.

At Par

Refers to a financial instrument (e.g., bond or stock) being traded at its face value.

Convertible Bond

A type of corporate bond that can be converted into a pre-specified amount of the issuing company's equity at certain times during its life, usually at the discretion of the bondholder.