Countries a and B Have the Same GDP

question 29

Multiple Choice

Countries A and B have the same GDP.In country A,people eat often in restaurants,but in country B people eat more often at home.Therefore

• A)economic activities are underestimated in country A.
• B)economic activities are overestimated in country B.
• C)GDP represents accurate measure of economic activities in both countries.
• D)GDP is underestimated in country B.

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Definitions:

Discount Rate

The interest rate charged by central banks for loans to commercial banks or the rate used in discounted cash flow analysis to determine the present value of future cash flows.

Present Value

The present worth of a future amount of money or series of cash flows, considering a certain rate of return.

Rate Of Return

A measure of the gain or loss on an investment over a specified period, expressed as a percentage of the investment’s initial cost.

Cash Flows

The net amount of cash being transferred into and out of a business, typically categorized into operating, investing, and financing activities.