Scenario 13-2

question 18

Multiple Choice

Scenario 13-2. Assume the following information for an imaginary, closed economy.
GDP = $200,000; consumption = $120,000;
government purchases = $35,000; and taxes = $25,000.
-Refer to Scenario 13-2. For this economy, private saving is equal to

• A)$40,000.
• B)$50,000.
• C)$55,000.
• D)$60,000.

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Definitions:

Net Cash

The amount of cash remaining after all operating, investing, and financing activities have been accounted for over a specific period.

Investing Activities

Transactions related to the acquisition or sale of long-term assets and investments.

Noncurrent Assets

Assets intended for long-term use and not expected to be converted into cash within one year, such as equipment, real estate, and patents.

Direct Method

A cash flow statement reporting approach that lists major outgoing payments and incoming receipts during a period.