Interest Paid by Households and by the Government Is

question 243

Multiple Choice

Interest paid by households and by the government is

• A) counted in national income, but not in GDP.
• B) not counted in GDP because it is not assumed to flow from the production of goods and services.
• C) not counted in GDP but is counted in GNP because it is paid by U.S. citizens to people living in the United States.
• D) included in both GDP and GNP because it represents an expenditure by one group and a receipt of income by another group.

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Definitions:

Coupon Rate

Each year, the interest yield on a bond is expressed as a percentage of its nominal value.

Market Rate of Interest

The prevailing rate at which borrowers and lenders agree to transact, influenced by various economic factors.

Bond

A fixed income instrument representing a loan made by an investor to a borrower, typically corporate or governmental.

Issued

Refers to securities or other financial instruments that have been created and offered for sale to investors.