Value Added Is

question 24

Multiple Choice

Value added is

• A)used to measure GDP under the spending approach
• B)the final sales value of a firm's output
• C)the value of a firm's output plus the value of intermediate goods used in production
• D)the value of a firm's output minus the value of intermediate goods used in production

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Definitions:

Government Purchases

Expenditures by government bodies on goods and services that directly absorb resources or services and are part of government consumption expenditure and gross investment.

Net Taxes

The difference between the total amount of taxes collected by the government and any transfers or subsidies it pays out.

Spending Multiplier

A concept in economics that quantifies the impact of a change in fiscal policy on the overall economy, indicating how an initial change in spending leads to a larger change in income and output.

Potential Output

The maximum amount of goods and services an economy can produce when it uses its resources fully and efficiently, without causing inflation.