The Table Given Below States the Value of the GDP

question 11

Multiple Choice

The table given below states the value of the GDP and the different components of aggregate expenditure for two years. Table 10.1
Refer to Table 10.1.If real GDP equals $1, 000 in year 1, then:

• A)unplanned inventory investment is zero.
• B)unplanned inventories increase by $50.
• C)inventories decrease by $100.
• D)inventories increase by $60.
• E)real GDP is less than aggregate expenditure.

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Definitions:

Spending Variance

The variance between the budgeted and the actual expenditure in a given category or time frame.

Planning Budget

A budget prepared for a future period that outlines expected revenues, expenses, and other financial activities to guide decision-making.

Equipment Depreciation

This refers to the accounting process of allocating the cost of physical assets over their useful lives to account for the loss in value.

Spending Variance

The difference between the actual expenditure and the budgeted amount.