If National Income Accountants Fail to Make an Adequate Adjustment

question 43

Multiple Choice

If national income accountants fail to make an adequate adjustment for increases in the quality of goods and services over time,

• A) increases in real GDP will understate the growth rate of real output.
• B) increases in real GDP will overstate the growth rate of real output.
• C) the GDP deflator will overstate the rate of inflation.
• D) the GDP deflator will understate the rate of inflation.
• E) both a and c are correct.

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Definitions:

Poison Pill

Shareholder rights provisions that allow existing shareholders in a company to purchase additional shares of stock at a lower than market value if a potential acquirer purchases a controlling stake in the company.

Corporate Restructuring

The process of significantly changing a company's business model, organizational structure, or financial structure, often in response to financial pressures.

Horizon Value

The estimated value of a company or investment at the end of a specific period, taking into account future cash flows or income it will generate.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set.