Which of the Following Is True Regarding the Measurement of GDP

question 8

Multiple Choice

Which of the following is true regarding the measurement of GDP?

• A)Wages and profit income are used in the income approach to GDP.
• B)Wages and consumption are used in the expenditure approach to GDP.
• C)Consumption and investment are used in the income approach to GDP.
• D)Government expenditure is only counted in the income approach to GDP.
• E)Investment and wages are expenditures,and are therefore are used in the expenditure approach to GDP.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Present Value Index

A financial metric that evaluates the profitability of an investment or project by comparing the present value of cash inflows to the present value of cash outflows.

Compound Interest

This concept involves calculating interest on the original investment or loan amount, in addition to the interest that has compounded from past periods.

Cash Payback Period

The duration required for an investment to generate cash flows sufficient to recover the initial outlay, measuring the investment's liquidity or risk.