Real GDP Was $4,719 Billion in Year 1 and $4,848

question 93

Multiple Choice

Real GDP was $4,719 billion in Year 1 and $4,848 billion in Year 2.In contrast, real GDP per capita in Year 1 was $19,261, but in Year 2 it was only $19,162.Why did one measure increase while the other measure decreased?

• A)Real GDP indicates the level of industrial production and provides a measure of the economic strength of the nation; it is the only valid measure of economic growth.
• B)Inflation occurred during this period; therefore the two measures are not comparable.
• C)Population increased during this time period so real GDP per capita data reflect this change.
• D)Real GDP per capita measures changes in labour productivity that are not captured by a simple measure like real GDP.

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Definitions:

Bond Interest Expense

Bond interest expense is the cost incurred by an issuer of bonds due to periodic interest payments made to bondholders.

Carrying Amount

The value at which an asset is recognized on the balance sheet after deducting any accumulated depreciation and impairment charges.

Bonds Payable

Bonds payable are long-term liabilities that represent funds borrowed by a company from investors, to be repaid with interest at a future date.

Free Cash Flow

The amount of cash a company generates after accounting for cash outflows to support operations and maintain its capital assets, indicative of financial health.