In a Given Year, Nominal GDP Increases by Approximately 7

question 35

Multiple Choice

In a given year, nominal GDP increases by approximately 7 percent, but real GDP falls by 2 percent.Which one of the following explanations is most likely?

• A)Prices increased by 7 percent.
• B)Prices fell by 2 percent.
• C)Prices fell by 9 percent.
• D)Prices increased by 9 percent.
• E)Output rose by 2 percent.

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Definitions:

ROE

Return on Equity; a measure of the profitability of a business in relation to the equity, calculated as net income divided by shareholder equity.

Assets

Resources owned by a company that have economic value and can be converted into cash, including but not limited to property, plant, equipment, and intellectual property.

D/A

Debt-to-Assets ratio, a financial metric indicating the proportion of a company's assets that are financed by debt.

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profit that includes all incomes and expenses except interest and income tax expenses.