There Is an Inverse Relationship Between Real GDP and Inflation

question 46

Multiple Choice

There is an inverse relationship between real GDP and inflation because

• A)an increase in inflation leads to a higher interest rate, which leads to an increase in real GDP.
• B)an increase in inflation leads to a higher interest rate, which leads to a decrease in potential GDP that causes real GDP to decline.
• C)an increase in inflation leads to a higher interest rate, which leads to a decrease in real GDP.
• D)an increase in inflation leads to a lower interest rate, which leads to a decrease in real GDP.
• E)a decrease in inflation leads to a higher interest rate, which leads to a decrease in real GDP.

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Definitions:

Implied Contract

A contract formed in whole or in part from the conduct of the parties (as opposed to an express contract).

Enforce In Court

The act of seeking judicial action to ensure compliance or to execute a legal right, often involving litigation.

Fully Performed

Refers to a scenario where all terms and obligations of a contract have been met by all parties involved.

Executory

Describing a contract that has not yet been fully performed or completed by all involved parties.