Jake, Sr Sells the Family Business, a Factory That Produces Snake

question 129

Multiple Choice

Jake, Sr. sells the family business, a factory that produces snake oil, to Jake, Jr., for $100, even though the factory has been assessed at $400,000. How will this transaction affect GDP?

• A) Investment will increase by $100.
• B) Investment will increase by $400,000.
• C) Consumption will increase by $400,000.
• D) GDP will not be affected by the transaction.

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Definitions:

Authorized Stock

Authorized Stock refers to the maximum number of shares a corporation is legally allowed to issue, as specified in its articles of incorporation.

Formal Accounting Entry

A documented record in accounting that notes all the details of a financial transaction within an organization’s financial system.

Bylaws

The set of rules or guidelines that govern the internal management and regulations of an organization or corporation.

Charter

A legal document establishing a corporation or other organization, outlining its structure, purpose, and regulations.