Refer to the Above Diagram

question 94

Multiple Choice

Refer to the above diagram.Which of the following statements is correct?

• A)The price index is greater than 100 for every year shown on the graph.
• B)Nominal GDP must be deflated in each year prior to 1992 to determine real GDP.
• C)Real GDP has grown in this economy, but nominal GDP has not.
• D)Nominal GDP must be deflated in each year since 1992 to determine real GDP.

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Definitions:

Variable Cost

Costs that change in direct proportion to changes in the levels of production or sales activities, such as materials and labor costs.

Relevant Range

The range of activity or volume over which the assumed cost behavior is valid, beyond which cost patterns and relationships may change.

Average Costs

The total costs divided by the number of units produced, giving a per unit cost average.

Total Variable Cost

The sum of all costs that vary with output level, including materials, labor, and other costs that increase with production volume.