Attempting to Calculate the Value of an Economy by Adding

question 52

Multiple Choice

Attempting to calculate the value of an economy by adding up the value of every good and service produced would lead to:

• A) overcounting, as the value of intermediate products would be counted twice.
• B) overcounting, as every good sold is marked-up in price.
• C) undercounting, as most goods are not sold in retail markets.
• D) undercounting, as the value of money changes over time.

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Definitions:

Payments

The transfer of money from one party to another in exchange for goods, services, or to fulfill a legal obligation.

Trade Balance

The difference in value between a country's imports and its exports over a certain period, indicating the balance of trade.

Current Account

The current account is a component of a country's balance of payments that includes the balance of trade, net primary income, and net income from abroad.

Capital Account

The capital account, in international economics, refers to part of a country's balance of payments that records all transactions involving the purchase or sale of assets.