If Nominal GDP Increased from $4 Billion to $5 Billion

question 200

Multiple Choice

If nominal GDP increased from $4 billion to $5 billion while real GDP increased from $3 billion to $4 billion, it follows that:

• A)the price level and real output increased at the same rate.
• B)real output rose and price level fell.
• C)the price level increased at a faster rate than real output.
• D)the price level rose by 25 percent.

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Definitions:

Current Account Deficit

A situation where a country's total imports of goods, services, and transfers are greater than its total exports, indicating that it is spending more foreign currency than it is earning.

Merchandise Trade Deficit

A situation where a country's imports of goods exceed its exports of goods over a given period, leading to a negative balance of trade.

Service Trade Deficit

The situation where the value of a country's imports of services exceeds the value of its exports of services.

Capital Account Surplus

A situation where the inflows of foreign capital exceed the outflows, often reflecting in a nation's balance of payments.