If Real GDP in a Closed Economy Is $40 Billion

question 152

Multiple Choice

If real GDP in a closed economy is $40 billion, consumption is $20 billion, and government purchases are $10 billion, what is investment?

• A)$10 billion
• B)$30 billion
• C)$40 billion
• D)$55 billion
• E)$70 billion

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Definitions:

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting in the United States.

Accrual Accounting

A financial recording strategy that documents earnings and outlays upon accrual, rather than basing the records on the actual cash exchange dates.

Cash Receipts

The total amount of cash collected by a business during a specific period, including revenue from sales, interest, dividends, and other cash inflows.

Full Disclosure

A principle requiring that financial statements provide all necessary information to ensure a clear understanding of a company’s financial condition.