A Minnesota Farmer Buys a New Tractor Made in Iowa

question 88

Multiple Choice

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

• A) U.S. investment and GDP increase, but German GDP is unaffected.
• B) U.S. investment and German GDP increase, but U.S. GDP is unaffected.
• C) U.S. investment, U.S. GDP, and German GDP are unaffected, because tractors are intermediate goods.
• D) U.S. investment, U.S. GDP, and German GDP all increase.

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Definitions:

Reconciliation

The process of ensuring two sets of records or accounts are in agreement, often used in financial accounting to match bank statements with internal records.

Super-Variable Costing

No definition as "Super-variable Costing" is not recognized as an established term in finance or accounting.

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.

Direct Materials

Materials that can be directly linked to the production of a product and are essential components of the final product.