Suppose That an Economy Is Experiencing Continuously Rising Prices

question 122

Multiple Choice

Suppose that an economy is experiencing continuously rising prices. If 2000 is the base year, then the real GDP in 2000 is _______ than the nominal GDP.

• A) greater than
• B) equal to
• C) less than
• D) There is insufficient information to answer this question.

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Definitions:

Regression

A statistical method for estimating the relationships among variables, often used for prediction and forecasting in finance.

Correlation Coefficient

A statistical measure that calculates the strength of the relationship between two variables, ranging from -1 to 1, where 1 indicates a perfect positive correlation and -1 indicates a perfect negative correlation.

Standard Deviation

A statistical measure that represents the dispersion or variability of a data set or investment returns, indicating how much the values in the set deviate from the mean.

Sharpe Ratio

A measure used to assess the risk-adjusted return of an investment by comparing its excess return to its standard deviation of returns.