Assuming an Asset Is Used Evenly Over a Four-Year Service

question 19

Multiple Choice

Assuming an asset is used evenly over a four-year service life, which method of depreciation will always result in the largest amount of depreciation in the first year?

• A) Straight-line.
• B) Units-of-production.
• C) Double-declining balance.
• D) Sum-of-the-year's digits.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, which provides a more accurate representation of an economy's size and how it's growing over time.

Disposable Income

Money left after taxes and compulsory fees have been subtracted, which can be used for spending or saving according to personal preference.

Marginal Propensity

The additional amount that people consume or save when they receive an extra dollar of income.

Simple Spending Multiplier

A ratio that estimates the impact on aggregate output (or income) of a change in autonomous spending.