GDP Does Not Count

question 11

Multiple Choice

GDP does not count:

• A) the estimated value of homemaker production.
• B) state and local government purchases.
• C) spending for new homes.
• D) changes in inventories.

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Definitions:

Net Realizable Value Method

An accounting method used to value an asset at the estimated selling price in the ordinary course of business, minus estimated costs of completion, disposal, and transportation.

Sequential Method

A cost allocation method where support departments' costs are allocated to production departments in a specific order, that somewhat reflects the level of services provided among support departments.

Support Departments

Units within an organization that provide essential services or support to the operational departments but do not directly participate in the primary activity of the business.

Proportional Usage

The allocation of costs, resources, or time in direct relation to the amount of goods or services produced or consumed.