The Country of Yokovia Does Not Trade with Any Other

question 26

Multiple Choice

The country of Yokovia does not trade with any other country.Its GDP is $20 billion.Its government collects $2 billion in taxes.Consumption equals $15 billion and investment equals $2 billion.What is public saving in Yokovia,and what is the value of the goods and services purchased by the government of Yokovia?

• A)-$2 billion and $1 billion.
• B)$1 billion and $1 billion.
• C)-$1 billion and $3 billion.
• D)-$2 billion and $3 billion.

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Definitions:

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization, such as purchasing equipment or acquiring another business.

Discounted Cash Flow

A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment, focusing on cash flows rather than profitability.

Net Present Value

A method used to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.