-Refer to the Above Diagram for a Private Closed Economy

question 136

Multiple Choice

-Refer to the above diagram for a private closed economy.At the $300 level of GDP:

• A) aggregate expenditures and GDP are equal.
• B) consumption is $250 and planned investment is $50.
• C) saving equals investment.
• D) all of the above are true.

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Definitions:

Allowance Method

An accounting technique used to account for bad debts, where an estimated amount is deducted from accounts receivable to reflect possible non-collection.

Bad Debts

are amounts owed to a company that are considered uncollectible, leading to a financial loss.

Percentage of Sales

A financial analysis tool used to forecast future expenses, based on a fixed percentage of the total sales.

Allowance for Doubtful Accounts

A contra asset account on a company's balance sheet that estimates the amount of receivables that may not be collected.