To Calculate GDP Once National Income Has Been Computed, We

question 63

Multiple Choice

To calculate GDP once national income has been computed, we must

• A) add indirect business taxes and transfers and subtract profits.
• B) add depreciation and subtract indirect business taxes.
• C) add depreciation and indirect business taxes and transfer payments and subtract other business income adjustments and net U.S. income earned abroad.
• D) add indirect business taxes and transfers and subtract depreciation, other business income adjustments, and net U.S. income earned abroad.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Unit Selling Price

The amount for which a unit of product is sold, not including any discounts or allowances.

Variable Cost Method

An accounting approach where costs that vary directly with the level of production are allocated to products, influencing the cost of goods sold and inventory valuation.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, indicating the amount contributing towards covering fixed costs and generating profit.