Historically,the Change in Real GDP During Recessions Has Been

question 13

Multiple Choice

Historically,the change in real GDP during recessions has been

• A)mostly a change in investment spending.
• B)mostly a change in consumption spending.
• C)about equally divided between consumption and investment spending.
• D)sometimes mostly a change in consumption and sometimes mostly a change in investment.

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Definitions:

Average Rate of Return

A financial ratio that represents the average net profit or return expected on an investment over its lifetime, expressed as a percentage.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, dividing its cost minus salvage value by its useful life, resulting in equal annual depreciation expenses.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment or project, calculating the difference between the present value of cash inflows and outflows.

Present Value Index

A calculation that compares the present value of cash inflows to the initial investment, often used in capital budgeting.