If Nominal GDP Rose in One Year from $2,000 Billion

question 36

Multiple Choice

If nominal GDP rose in one year from $2,000 billion to $2,400 billion at the same time that a price index rose from 200 to 220, then real GDP would

• A) have risen by approximately 20 percent.
• B) have fallen by approximately 10 percent.
• C) have risen by approximately 10 percent.
• D) have fallen by approximately 20 percent.
• E) not be determinable from the information provided.

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Definitions:

Agency Costs

Agency costs arise from conflicts of interest between managers and shareholders, leading to expenses that do not necessarily benefit the shareholders.

Market Share

The portion of a market controlled by a particular company or product, expressed as a percentage of total sales volume in a particular industry.

Salary Incentives

Salary incentives are additional compensation above base salary offered to employees as a motivation to exceed performance targets or achieve specific objectives.

Cash Flows

Money moving in and out of a business, indicating the company's liquidity over a certain period.