In an Economy with Persistent Inflation

question 70

Multiple Choice

In an economy with persistent inflation,

• A) real GDP will grow faster than nominal GDP.
• B) nominal GDP will grow faster than real GDP.
• C) nominal and real GDP will grow at the same rate.
• D) nominal and real GDP will both fall.

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Definitions:

Expected Return

The projected average amount of profit or loss an investment is anticipated to generate, based on historical performance or probability analysis.

Risk-Free Rate

Risk-free financial gains, usually signified by government securities' yields.

Standard Deviation

A statistical measurement that depicts the variability or spread of a set of data points or investment returns around their mean.

Diversification

An investment strategy aimed at reducing risk by allocating investments among various financial instruments, industries, and other categories.