What Explains the Rise in Income in the U

question 23

Multiple Choice

What explains the rise in income in the U.S.between 1900 and 2013?

• A)business cycles
• B)inflation
• C)recessions
• D)depressions
• E)none of the above

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Definitions:

Capitalized Interest

Interest expenses that are included as part of the cost of constructing a long-term asset and thus included in the asset's valuation on the balance sheet.

Incremental Borrowing

Refers to the additional interest or costs a company incurs to obtain extra funds or increase its level of debt.

Commercial Substance

The concept refers to a situation where the risk, timing, or amount of future cash flows of a business changes as a result of a transaction.

Straight-Line Method

A method of calculating the depreciation of an asset, which spreads the cost evenly over its useful life.