If the Nominal Deficit Is $200 Billion, the Real Deficit

question 132

Multiple Choice

If the nominal deficit is $200 billion, the real deficit is $180 billion, and total debt is $2 trillion, then inflation is:

• A)1 percent.
• B)2.5 percent.
• C)4 percent.
• D)5 percent.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or output, such as materials and labor.

Fixed Cost

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance.

Average Cost

The total cost divided by the quantity produced, calculating the cost on a per unit basis.

Total Output

The total quantity of goods or services produced by a firm or economy.