Double Counting (Counting the Same Thing Twice) in GDP Accounting

question 226

Multiple Choice

Double counting (counting the same thing twice) in GDP accounting is avoided by not including

• A) net exports.
• B) intermediate goods.
• C) illegal activities.
• D) depreciation.

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Definitions:

Contribution Margin Ratio

A financial metric that shows what portion of sales revenue is available to cover fixed costs and generate profit after variable costs have been paid.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance premiums.

Break-Even Point

The sales level at which a business neither makes a profit nor incurs a loss.

Variable Expenses

Expenses that vary directly with the amount of production or the degree of business activity.