An Increase in Real GDP from 2002 to 2006 Necessarily

question 35

Multiple Choice

An increase in real GDP from 2002 to 2006 necessarily indicates that

• A)people are better off in 2002 than they were in 2006.
• B)people are happier in 2006 than they were in 2002.
• C)prices increased between 2002 and 2006.
• D)quantities of goods and services produced increased between 2002 and 2006.

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Definitions:

Current-Period Income

The net income earned by a business during the most recent accounting period.

Accrual Accounting

An accounting method where transactions are recorded when they are earned or incurred, not necessarily when cash changes hands, providing a more accurate financial picture.

Expense Recognition

A principle in accounting that dictates when costs are recognized as expenses in the financial statements, often aligned with the revenue they helped to generate.

Cash Basis

An accounting method where revenues and expenses are recorded when cash is received or paid, not when the obligation is incurred.