Holding Other Expenditures Constant, If Imports Fall by $20 Billion

question 5

Multiple Choice

Holding other expenditures constant, if imports fall by $20 billion and exports fall by $10 billion, then GDP

• A) rises by $10 billion.
• B) falls by $10 billion.
• C) falls by $30 billion.
• D) rises by $30 billion.

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Definitions:

Separate Capital Account

An account used in partnerships and sole proprietorships that shows the owner's original investment plus any retained earnings or minus any losses and withdrawals.

Partnerships

A form of business organization in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a partnership agreement.

Treasury Stock

Treasury Stock represents shares that were issued and subsequently repurchased by the company, reducing the amount of outstanding stock on the open market.

Common Stock

A type of security that represents ownership in a corporation, granting holders voting rights and a share in the company’s profits via dividends.