Generally Accepted Accounting Principles

question 22

Multiple Choice

Generally accepted accounting principles

• A) are changing continually.
• B) are sound in theory but rarely used in practice.
• C) have eliminated all the weaknesses in accounting practice.
• D) are accounting rules formulated by the Internal Revenue Service.

Understand the concept and reasons behind the downward slope of the aggregate demand curve.

Identify and distinguish between final goods and intermediate goods.

Understand the calculation and interpretation of GDP, including what is excluded or included in its calculation.

Recognize the impact of various activities and expenditures on GDP.

---

Definitions:

Income

The amount of money received over a period of time either as payment for work, goods, or services, or through investments.

Interest Forgone

The potential interest one could have earned on their money if it had been invested rather than spent or kept in a non-interest-bearing account.

MC (Marginal Cost)

The additional cost resulting from the production of one more unit of a product or service.

ATC (Average Total Cost)

The total cost of production divided by the quantity of output produced, representing the per-unit cost of production.