If Nominal GDP Increases 4 Percent During a Year, and Real

question 89

Multiple Choice

If nominal GDP increases 4 percent during a year, and real GDP increases 7 percent during the same year, which of the following must by true?

• A) The total value of GDP must have increased 11 percent during the year.
• B) The general level of prices as measured by the GDP deflator decreased by approximately 3 percent during the year.
• C) The general level of prices as measured by the GDP deflator increased by approximately 3 percent during the year.
• D) Imports must have been about 3 percent larger than exports during the year.

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Definitions:

Continuous Supply

Uninterrupted provision or availability of a particular resource or commodity over a period of time.

ATP Molecules

Adenosine triphosphate molecules, the primary energy carrier in all living organisms on earth, providing energy for many processes.

Glycolysis

A metabolic pathway that breaks down glucose into pyruvate, producing energy in the form of ATP.

Net Yield

The final return on an investment after subtracting all costs, taxes, and expenses.