Suppose an Economy Has Some Inflation

question 221

Multiple Choice

Suppose an economy has some inflation. Then, after a base year, the value of real GDP will

• A) be less than nominal GDP.
• B) will be approximately half the value of nominal GDP.
• C) be greater than nominal GDP.
• D) not be different from nominal GDP.

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Definitions:

Cash Budget

A forecast of cash inflows and outflows for a business or individual for a specific period of time.

Budgeted Income Statement

A financial statement that forecasts a company's revenue, expenses, and net income for a future period.

Budgeted Balance Sheet

A projection of a company's financial position at a future date, detailing assets, liabilities, and equity.

Production Budget

A financial plan that estimates the number of units to be produced to meet sales goals within a given period.