Suppose That in 2016 Canada's Automobile Manufacturers Produced 2 Million

question 38

Multiple Choice

Suppose that in 2016 Canada's automobile manufacturers produced 2 million cars priced at $20 000 each.And in 2017 they produced 1 million cars priced at $40 000 each.Ceteris paribus,the change in nominal national income is

• A)a decrease because fewer cars were produced.
• B)an increase because the price of each car increased.
• C)insufficient information to know.
• D)no change in nominal national income.
• E)an increase because of inflation.

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Definitions:

Expenses

Costs incurred by a business or individual in the process of earning revenue, ranging from utilities to salaries.

Drawing Account

An account used to record withdrawals made by an owner from the business for personal use.

Owner's Capital Account

An equity account that represents the owner's invested capital plus any retained earnings or minus any withdrawals.

First Closing Entry

The first journal entry in the closing process that transfers revenue and the expense account balances to the owner’s capital account as either a net income or a net loss.