The Table Below Shows the Price Indexes and the Nominal

question 137

Multiple Choice

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005.The real GDP _____ between 2002 and 2005.
Table 6.3
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$$\begin{array} { c c c } \text { Year } & \text { Price Index } & \text { Nominal GDP } \\\hline 2001 & 100 & \$ 95 \text { billion } \\2002 & 105 & \$ 110 \text { billion } \\2003 & 110 & \$ 120 \text { billion } \\2004 & 120 & \$ 125 \text { billion } \\2005 & 132 & \$ 137.5 \text { billion }\end{array}$$

• A)increased more than $5 billion
• B)decreased more than $5 billion
• C)increased by less than $1 billion
• D)decreased by less than $1 billion
• E)remained constant

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Definitions:

Equilibrium Quantity

The quantity of goods or services at which quantity demanded equals quantity supplied, leading to market equilibrium.

Perfectly Inelastic

A situation in demand where the quantity demanded does not change regardless of any change in price. This means the demand curve is a vertical line, indicating total unresponsiveness to price changes.

Excise Tax

A tax levied on specific goods or services, such as tobacco or gasoline, often imposed to discourage consumption or generate revenue.

Incidence

Refers to the allocation or distribution of the economic impact of a particular tax among various parties.