An Example of "Investment" in Computing Real GDP Using the Expenditure

question 357

Multiple Choice

An example of "investment" in computing real GDP using the expenditure approach is the purchase of

• A) a new set of tools by an auto mechanic, for use in repairing cars.
• B) 100 shares of IBM stock.
• C) a 100 year old house by a married couple.
• D) computer chips by Dell to put in their personal computers.

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Definitions:

Interest

Interest is the charge for borrowing money, typically expressed as a percentage of the principal amount per year.

Deposits

Funds placed into an account in a bank or other financial institution for safekeeping.

Compounded Quarterly

Interest on an investment or loan calculated four times per year, adding each quarter's interest to the principal for the calculation of the next quarter's interest.

Interest Rate Change

Modification in the percentage that determines the amount of interest to be paid on a loan or received on deposits over time.