The Concept of Value Added

question 47

Multiple Choice

The concept of value added

• A) is not applicable to intermediate goods.
• B) represents a firm's or industry's contribution to production.
• C) is the same as a firm's profits.
• D) refers to the nonmarketed goods and services not included in GDP.
• E) helps distinguish between current dollar GDP and real GDP.

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Definitions:

Capital Lease

A lease agreement that is classified as a purchase by the lessee for accounting purposes, effectively treating the leased asset as owned property.

Executory Costs

Costs related to the unperformed obligations under a lease, typically including insurance, maintenance, and taxes.

Minimum Lease Payments

The lowest amount that a lessee is obligated to pay over the lease term for the right to use an asset.

Rental Payments

Periodic payments made by a lessee to a lessor for the use of a property, vehicle, or equipment.