Consider the Data in the Following Table Do the Data Match the Experience of a Developed Country

question 51

Multiple Choice

Consider the data in the following table.
$$\begin{array} { l c c } \hline \text { Year } & \begin{array} { c } \text { Growth Rate of } \\\text { Real Investment }\end{array} & \begin{array} { c } \text { Growth Rate } \\\text { of Real GDP }\end{array} \\\hline 1 & 0 \text { percent } & 2 \text { percent } \\2 & - 2 \text { percent } & - 3 \text { percent } \\3 & 3 \text { percent } & 5 \text { percent } \\4 & - 1 \text { percent } & 0 \text { percent } \\5 & 1 \text { percent } & 1 \text { percent } \\\hline\end{array}$$

Do the data match the experience of a developed country like the United States?

• A) Yes, because the two growth rates are positively correlated.
• B) No, because the two growth rates should be positively correlated.
• C) Yes, because the two growth rates are negatively correlated.
• D) No, because the two growth rates should be negatively correlated.
• E) Yes, because these two growth rates are unrelated.

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Definitions:

Income Statement Amounts

The monetary values of revenue, expenses, gains, and losses reported in the income statement.

Common-Size Percentages

Financial analysis tool that converts each line item of financial statements into a percentage of a common base figure to allow for easy comparison.

Balance Sheets

Financial statements that show a company's financial position, detailing assets, liabilities, and equity at a specific point in time.

Inventory Turnover

A ratio indicating how many times a company's inventory is sold and replaced over a period.