If Nominal GDP Increased from $8,000 Billion in the Base

question 15

Multiple Choice

If nominal GDP increased from $8,000 billion in the base year to $8,400 billion in the following year and real GDP stayed the same, which is true?

• A)the GDP-deflator increased from 100 to 110
• B)the GDP-deflator increased from 80 to 100
• C)the GDP-deflator increased from 100 to 120
• D)prices increased on average by 5 percent
• E)prices increased on average by 10 percent

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Definitions:

Feudalism

Was a legal arrangement in preindustrial Europe that bound peasants to the land and obliged them to give their landlords a set part of the harvest. In exchange, landlords were required to protect peasants from marauders and open their storehouses to feed the peasants if crops failed.

Social System

An organized set of interrelated structures that function together to maintain balance within a society.

Progressive Tax

A taxation system where the tax rate increases as the taxable income or amount increases, placing a higher burden on those who have the ability to pay more.

Income Tax

A tax that governments impose on income generated by businesses and individuals within their jurisdiction, based on the income or profit earned.