Which Statement Does NOT Describe an Adjustment to National Income

question 107

Multiple Choice

Which statement does NOT describe an adjustment to national income to obtain GDP?

• A) Net exports are added to national income.
• B) A capital consumption allowance is added to national income.
• C) Income payments from the rest of the world are added to national income.
• D) Payments U.S. corporations and residents send to foreign residents are subtracted from national income.

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Definitions:

Investment

The allocation of resources, such as capital or time, into a venture with the expectation of generating future returns.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested back into the company.

Tangible Capital

Physical assets owned by a firm that are used in the production process, such as buildings, machinery, and equipment.

Opportunity Costs

The cost associated with not choosing the next best alternative in a decision-making process.