Suppose That Real GDP Grew More Slowly Than Nominal GDP

question 39

Essay

Suppose that real GDP grew more slowly than nominal GDP between year 1 and year 2. What must have happened to prices on average?

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Definitions:

GIC

A Guaranteed Investment Certificate (GIC) is a Canadian investment that offers a guaranteed rate of return over a fixed period of time, typically issued by banks or trust companies.

Maturity Value

The amount payable to the investor at the end of a security's maturity period; this includes the principal plus interest.

Treasury Bill

Short-term government securities issued at a discount from the face value and mature in a year or less, representing a secure investment.

Simple Interest

Interest calculated only on the principal amount, or the initial sum of money invested or loaned.